World News: A billion GPS chips expected to ship in 2013

World News:  A billion GPS chips expected to ship in 2013

According to a new study from ABI Research, GPS IC shipments are forecast to reach one billion annually in 2013. Average Selling Prices (ASPs) will continue to fall, but the effect on vendors' revenue streams will be more than offset by this strong growth in volume.

Industry analyst Jamie Moss comments that three factors will intersect to shape the future of the GPS IC market.

The average chipset price will drop to $3.50 or below by the end of 2008, permitting a true mass market adoption. This drop in ASP is driven by manufacturers' goal of producing receivers that can be included in lower-margin devices such as mobile phones; handset-based GPS will be critical to strong market penetration. The benefits will filter down to more traditional GPS uses such as in-car navigation.

Meanwhile, the market is seeing growing numbers of acquisitions – large chip manufacturers buying up specialist fabless GPS IC vendors in order to include their technologies in solutions that combine GPS with varied wireless RF product offerings, especially Bluetooth.

Significant examples of such acquisitions in the second half of 2007 include Global Locate, acquired by Broadcom for $146 million in June, GloNav acquired by NXP for $85 million in December, and u-Nav acquired by Atheros for $54 million, also in December.

In 2007, one firm – SiRF – held a commanding 70% share of the GPS IC market. It achieved this by getting in early and aggressively targeting the market for consumer devices. While professional GPS has been around for some time, it is a much smaller and slower-growing market segment.

"In terms of absolute performance there's not a lot to choose between rival manufacturers," says Moss. "To win important contracts the chipset must be as inexpensive as possible and as easy as possible for device manufacturers to integrate with Bluetooth, Wi-Fi, FM radio and cellular solutions. As it was with Bluetooth, there is no great proactive consumer demand for GPS in mobile phones today, but once it's there, people will use it and expect it."

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