CCID Consulting: PND market is relatively mature, mobile phone applications will become GPS chip ven

CCID Consulting: PND market is relatively mature, mobile phone applications will become GPS chip vendors’ battleground
Publication Date:2009-10-14
Semiconductor Industry Research Center, By Analyst Yue Ting
In recent years, China’s GPS chip market is in rapid development period. Because the market is not mature, the market size has great growth space; meanwhile, IC application market is a highlight. In 2008, China’s IC market is up 6.2% year-on-year; GPS chip market is up 46.7% year-on-year; the size of China’s GPS chip market has reached 1.102 billion Yuan.
Figure Size and Growth of China’s GPS Chip Market, 2006-2008

Source: CCID Consulting, Jan. 2009
Portable applications’ demands for GPS chip market has continuous growth
In the application fields of China’s GPS chip market, PND and onboard GPS navigation still occupy the main position, especially PND market, which accounts for over 50% of the total market. Mobile phone GPS application has official development in 2007, although the market has some mobile phones with GPS functions, because of the limited sales volume, Nokia N95’s release marks mobile phone GPS applications’ large-scale promotion, which is also the transition of GPS mobile phone market. After a year of development, GPS mobile phones’ demands for GPS chip market in 2008 has reached 230 million Yuan, which accounts for 20.9% of the total GPS chip market. PND and mobile phone application markets are the impetuses of GPS chip market.
Figure Applications Structure of China’s GPS Chip Market in 2008

Source: CCID Consulting, Jan. 2009
Chips’ integrated applications have favorable development in different fields
With the wide application of GPS technology, military and civilian put forward high requirements for small size and low power consumption. Hardware design level ad chip manufacturing process drive the development of GPS chip technology. Low cost, small volume, low power consumption and sensitivity are GPS chip technological development direction. Judging from products’ application, different chips’ integrated applications have favorable development.
Baseband+RF: this solution integrates baseband and RF, which has the advantages of small volume, low power consumption and low cost. Because RF chip has certain requirements for interference, if this solution couldn’t deal with this problem, GPS sensitivity will be affected. With regard to application fields, this solution is suitable for the portable products, which have certain requirements for volume and power consumption, such as external GPS module, mobile phone and PDA; at present, it is not suitable for onboard navigation equipments.
Baseband+AP: this solution could deal with audio and video processing functions and GPS baseband signal processing functions. This solution realizes portable products’ GPS function, reduce the number of external components and reduce the whole solutions’ cost. At present, PND is this solution’s largest application field, especially SiRF AtlasIII chip has rapid development in this field. In the future, with the improvement of application processors’ frequency, this solution will have development in other field.
RF+Wifi+Bluetooth: this solution integrates GPS RF chip and other wireless application RF chip. Because mobile phones’ and other portable products’ wireless application functions have continuous increase, such as Bluetooth connection, Wifi, the integration of these wireless application RF chip is the effective method of reducing volume and cost. At present, this chip has limited application fields, which has certain application space in Bluetooth and mobile phones.
Table  Comparison of GPS Chip Integrated Solutions’ Advantages and Disadvantages

Source: CCID Consulting, Jan. 2009
Taiwanese companies greatly layout the market
With the gradually mature GPS application market, the competition in GPS chip market is heating up, which mainly reflects in the following these aspects: firstly, chip’s price drop is the major manifestations. Judging from GPS chip price development in recent years, taking SiRF chip as example, the price of baseband and RF chip set has decreased from $10 in 2006 to $5 in 2008, Taiwanese vendors’ price represented by Mstar is $2. Although GPS chip price drop has certain relation with output, the intense competition is one of factors; secondly, GPS chip vendors enter this field through purchasing and M&As. In recent years, GPS enters mass market. Former GPS’s industry structure and is different from the present product forms, most of chip enterprises are professional vendors, and the market size is small until PND application development. Many semiconductor vendors find this field’s potential. In order to improve enterprises’ competitiveness, M&As between enterprises increase; meanwhile, some vendors outside the field also enter this market through M&As, e.g., SiRF acquires Centrality; GloNav acquires CEVA’s GPS business, which is acquired by NXP; CSR acquires NordNav Technologies and Cambridge Positioning ; Atheros acquires U-Nav. Finally, The attention and investment of Taiwanese companies represented by MTK intensify the competition in GPS chip market. At present, the major Taiwanese companies in the market are Mstar, SkyTrag and MTK, within, Mstar and SkyTrage have early start in the market, which has certain accumulation in GPS module field; MTK entered the GPS chip market in 2007, and pays more attention to GPS market in 2008, and prepares to promote GPS application in mobile phone field. Because MTK’s powerful competitiveness in mobile phone baseband market, the competition in GPS chip market will heat up.
Table Supplier Distribution in GPS Chip Market

Source: CCID Consulting, Jan. 2009
Mobile phone market is vendors’ battleground
China’s GPS chip market will follow China’s GPS equipment products’ trend in the future. Affected by global financial crisis in 2009, PND equipment output growth has large-scale decrease, the growth rate is 9%; therefore, China’s GPS chip market’s growth rate has decreased to 18.6%. With GPS mobile phone output’s rapid growth, the growth rate of GPS chip market in 2010 will recover, the size of China’s GPS chip market in 2010 will reach 2.184 billion Yuan.
Figure Forecast on Size and Growth of China’s GPS Chip Market, 2009-2011

Source: CCID Consulting, Jan. 2009
With regard to application structure, because China’s PND output has explosive growth in 2007, its output’s growth rate has obvious decrease in 2008, and it still keep continuous decrease in the future; compared with PND field, the GPS applications in mobile phone is in initial stage. The growth rate of output of mobile phones with GPS functions in 2008 has reached 281.7%. Judging from GPS mobile phones’ quantity and development situation, the growth rate of mobile phones’ demands for GPS chip market in the future is higher than that of PND. The GPS mobile phones’ demands for chip market in 2011 will reach 916 million Yuan, which accounts for 41.9%.
On the other hand, SiRF occupies the largest share in PND chip market, other vendors and new entrants are difficult to shake’s SiRF’s dominant position. In mobile phone market, GPS chip market has small share; besides, traditional baseband chip has advantage in this field, the uncertainty of competition situation provides opportunities for some vendors; therefore, mobile phone application will become the important competition filed of chip enterprises.
Figure Forecast on Applications Structure of China’s GPS Chip Market, 2009-2011

Source: CCID Consulting, Jan. 2009