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Samsung threatens Broadcom's Bluetooth business

Posted: 26 Jul 2012     Print Version  Bookmark and Share

Keywords:Bluetooth  handset  connectivity 

Broadcom's growing market share in the connectivity market since 2008 now has competition following Samsung's latest acquisition of part of CSR, finds IMS Research. Broadcom's market-leading business of Bluetooth in handsets has a significant threat from Samsung who has emerged as a new player in the connectivity market, specifically in the key battleground of the smartphone, said IMS.

Last week Samsung acquired the handset connectivity and handset location business of CSR for Rs.1,693.99 crore ($310 million), as well as investing Rs.187.98 crore ($34.4 million) in return for 4.9 per cent stake in the remaining CSR business. The completion of this acquisition is expected to be in the fourth quarter this year.

As well as picking up the benefit of CSR's patent portfolio, this acquisition also adds the R&D and marketing support for its Bluetooth and GPS technology for handsets. This activity follows on from its acquisition in June of Nanoradio, a developer of ultra-low power Wireless LAN for chipsets for devices such as smartphones and tablets; and provides Samsung with the connectivity technologies with which to make an entrance into the wireless connectivity market.

Samsung already has a strong presence in supplying components, such as processors and memory, to many of its own broad range of handsets, as well as fabricating processors for the Apple iPhone 4S and new iPad.

According to the latest IMS Research study, Bluetooth– World – 2012, interest in the further integration of technologies onto the mobile application processor (system on chip / SoC) has been increasing. Qualcomm announced the integration of Bluetooth and Wi-Fi on its Snapdragon S4 for the first time and, although there are arguments against full integration, IMS Research forecasts that this is the direction the market will increasingly take. Whilst it is not yet clear whether Samsung will go down this route, there are indications that this may be a part of its roadmap; particularly as one of the key conditions placed on CSR, as part of the acquisition, is a 10-year restriction on providing connectivity solutions combined with an application processor to the handset market.

"This acquisition will have a significant impact on the competitive landscape of the connectivity market" said analyst Liam Quirke. "Whilst CSR's Automotive and Home divisions have continued to grow, its handset connectivity business has struggled, with revenues dropping 30 per cent from 2009 to 2011. In contrast, Broadcom has been gaining market share, driven by the success of its Mobile and Wireless group, which has more than doubled over the same period."

Quirke continued "Broadcom has established a market-leading position for connectivity in handsets, through its solutions combining Wi-Fi and Bluetooth, accounting for approximately half of the market in 2011; and has design wins with the two leading smartphone suppliers, Samsung and Apple." According to the IHS Mobile Handset Market Share Database, these two companies combined accounted for 51 per cent of smartphone shipments in Q1 2012.

Samsung is expected to begin to standardise on the use of its own connectivity technology within its handsets and this, combined with the resources available to Samsung to further develop the acquired technology, will enable it to capture a double-digit market share of the Bluetooth market. Quirke concludes, "Whilst the likely loss of Samsung's business will hit Broadcom, the real question is will future smartphone connectivity on the handset be provided as part of a SoC?" If so, is likely to mean even more competition for Broadcom from Samsung and others.

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