Among big changes in the works are China Mobile’s shift in procurement policy from five-mode smartphones to three-mode models, and big plans among Chinese apps processor vendors to embrace connectivity (WiFi and Bluetooth Low Energy).
Shift to three-mode smartphones
China Mobile, the world’s biggest cellular operator (in terms of subscriber numbers), initially bought only smartphones based on five-mode (supporting TD-LTE, FDD LTE, TD-SCDMA, WCDMA, GSM) and 10-frequency base band modems. The impetus behind this policy was said to help internationalize TD-LTE and promote development of multiple mobile communication technologies.
Last year, however, China Mobile relaxed its procurement rule to include three-mode (TD-LTE, TD-SCDMA, EDGE/GPRS/GSM) models.
As a result, those profiting from China Mobile’s new policy are China’s leading fabless chip companies such as Spreadtrum and Leadcore, along with China-based smartphones.
China Mobile sees three-mode smartphones helpful to launch more inexpensive TD-LTE smartphones, Chinese industry sources say. The operator hopes to aggressively promote its TD-LTE services, and the way to that goal is lowering required specification from five- to three-mode, they said.
For smartphone vendors making five-mode models, Qualcomm (which dominates the market) and Marvell were the only chip suppliers they could depend on.
In Qualcomm’s latest financial call last fall, president Derek Aberle acknowledged that he expects the global 3G/4G average selling prices will decline approximately 9-10% in fiscal 2015. Aberle explained, “Really a big part of the year-over-year decline is driven by growth in China, and in particular three-mode and Chinese OEMs I think gaining share over non-Chinese OEMs.”