The return on that was minimal. Broadcom invested in baseband to penetrate the mid to low range smartphone market where a complete platform is required.
But, says Strategy Analytics: "Broadcom 's baseband chips were neither leading edge nor first to market."
"Broadcom viewed its baseband business as supplementary to its connectivity business. For Qualcomm the baseband modem comes first and everything else is a revenue expansion opportunity," says SA.
Broadcom had less than 5% market share in baseband in 2013. It expects H1 2014 baseband revenues of $200-250 million.
Other companies exiting baseband processors have been: Analog Devices, Freescale, Infineon, NXP, ST-Ericsson and Texas Instruments.
Broadcom’s 3G baseband shipment year-over-year growth fell to just 4% in 2013 after 193% year-over-year growth in 2012.
This can be attributed to intense competition in the 3G baseband market and the maturity of 3G baseband technology.
"We believe that the barrier to entry in 3G basebands is low now and as a result the market has seen rapid price erosion in recent quarters, leaving vendors with very little margin," says SA.
In 2013, Broadcom acquired Renesas Mobile’s LTE assets to accelerate its LTE product introduction.
The LTE baseband segment is the fastest growing sub-segment of the baseband market with above-average ASPs. Qualcomm has over 95% share in the LTE baseband market.
In 2013, revenue from LTE basebands accounted for over one-third of total cellular baseband revenue in 2013 and we expect this growth to continue for the next few years.
Broadcom's exit leaves Qualcomm, Intel, MediaTek, Spreadtrum and Marvell as the key players in the baseband market.
Can Broadcom find a buyer for its baseband business?
"Freescale, ST-Ericsson, TI and Renesas Mobile all struggled to find buyers for their baseband businesses when they put them up for sale," says SA, "ST-Ericsson and Renesas Mobile, however, found a buyer for a piece of their baseband business and we expect Broadcom’s attractive LTE roadmap could attract a player with market share expansion plans."