Most consumers will be using mobile handsets with chipsets that provide Wi-Fi, Bluetooth and GPS (Global Positioning System) within the next five years, says market researcher ABI Research.
Another crucial change that delivers better handset performance and better battery life is the switch to multi-core processing, it said.
ABI said the past four quarters of decline in mobile handset sales had reversed with, a 4% growth in sales in the fourth quarter of 2009. It expects this to continue for the next five years as consumers refresh their handsets to take advantage of the latest apps and mobile capabilities.
"Bluetooth has the highest attach rate, with the average penetration rate expected to be 57% in 2010," it said.
It expected the penetration rate of GPS to double between 2010 and 2015, but Wi-Fi chips would deliver the highest revenue of the three connectivity chips over the next five years, it said.
ABI Research industry analyst Celia Bo forecast 4% revenue growth this year for handset semiconductors.
"Components such as baseband processors and application processors, which account for more than 60% of revenue in this segment, are expected to show revenue increases of 3% and 8% respectively in 2010," she said.
Bo said Qualcomm's dual core Snapdragon processor, announced in June, signalled a new era for technology architecture development.
"The market is set to see some significant improvements in application processor performance and power consumption, even as sales increase and average selling prices drop," Bo said.
Meanwhile, Microsoft and UK chip designer ARM announced on Friday that the Redmond-based software company would licence ARM designs for use in its mobile and embedded systems products. ARM dominates the silicon platforms used in mobile phones.
Computer Weekly says...
If we are all going to have Wi-fi on our mobile phones, consumers will switch to using free voice-over-internet (VoIP) calls rather than 3G services where they can.
Expect network operators to raise prices for data calls in the short to medium term, and to penalise 3G calls in the longer term as they increase their network capacity with LTE (long term evolution) technology.