In 2009, connectivity chips showed the greatest growth within the mobile phone semiconductor market, according to new data from ABI Research. The total revenue for handset Bluetooth, GPS, and WLAN in 2009 is forecasted to grow 16% compared to 2008, exceeding $1.9 billion, and with a CAGR of 11% between 2009 and 2014.

Industry Analyst Celia Bo says, "There has been a shift in balance within the mobile handset semiconductor market since 2008. Suppliers are feeling the impact of the uncertain macroeconomic environment, design win shifts, acquisitions and collaborations."

Major semiconductor components such as baseband processors, which account for over 50% of the revenue in this segment, declined 9.6% compared to last year; declines in mobile phone shipments as well as ASP have both contributed in the drop in revenue this year due to the uncertain economic conditions. Application processors managed a moderate gain, while radio frequency products declined in line with the overall market.

Signs showing a rebound in worldwide handset shipments in the fourth quarter of 2009 indicate that the handset semiconductor market started its recovery in the third quarter, and total revenue is expected to increase 3~8% over the next three year. Rising consumer demand for advanced functions is the key driving force for connectivity chip penetration in mobile handsets; they made up the biggest growth segment within mobile phone semiconductors segment.

In ABI Research's "Mobile Device Semiconductors Market Data," Bluetooth has the highest attach rate compared to other connectivity types: the average penetration rate is expected to be 60% in 2014. GPS devices have secured a solid position in the automotive segment and are gaining traction in mobile phones too; the penetration rate is expected to be 21% this year, and 47% in 2011. The revenue increase for Wi-Fi chips is shown be the highest among the three connectivity chips over the next five years, with a 23.7% CAGR.