There was a time when PC’s were a premium device accessible only to the upper segment of SEC. But talking about today it is more of a necessity then luxury, a very less number of people in this world are still thinking of buying one. And for these thinkers Smartphones are coming up with a taste of processing power from the most personal of computers. At the same time mobile phone are catching up with a new road into other consumer devices, like providing e-books and map updates on the go.

Intel, this week grabbed the wireless chip business of Germany’s Infineon. Up for captures is a US$30billion annual semiconductor market. While by the end of this year mobile phone unit sales is predicted to go around a tenth higher on last year, the smartphone portion which contains more valuable silicon is expanding at three times that rate. As smartphone units replace other traditional phones, average selling prices for chipmakers would stay reasonably stable, even as smartphone prices themselves will continue to fall.

Production is still relatively isolated. Qualcomm is the largest manufacturer, supplying processors to 80% of Smartphones using Android, the best ever growing mobile operating system. But Qualcomm only takes 30% of wireless chip market revenues overall, calculates consultancy iSuppli. While the rivalry has contracted over the last five years, the market is still open to unsettling innovation.

The source of that disruption remains to be seen. Texas Instruments is meandering behind its baseband business in wireless to concentrate on processors, while Intel is heading in the opposite direction Infineon’s engineers are expert in cramming several functions onto one chip. It is not hard to understand the appeal.

New devices such as e-readers and media tablets are still in the tens of millions range, but such growth is incremental and technologically straightforward to address. Gartner forecasts revenue growth for the mobile application processor market of 22% annually from 2009 to 2014.