Another Smartphone Maker Wants In on Chips

Mobile hardware is evolving very differently from how PCs did decades ago, particularly when it comes to one of the most important components inside: the applications processor. Instead of Intel (INTC -1.79%) hegemony, the market for smartphone and tablet processors is much more competitive.

There's also another important trend toward vertical integration that OEMs are now pursuing, which has implications on third-party chip makers. Apple (AAPL -0.57%) took chip design in-house in 2010 with the iPad's A4, which was subsequently featured in the iPhone 4. Since then, the iDevice maker has dramatically evolved its chip strategy to new heights, and hinted that even more to come from its new "Technologies" group led by Bob Mansfield.

Samsung is the other top dog in smartphones, and continues to utilize its own Exynos processors wherever possible, even if it still taps Qualcomm (QCOM -1.75%) from time to time. Just months ago, LG was also reportedly exploring chip design after confirming it had licensed numerous core designs from ARM Holdings. LG was the No. 5 smartphone player in 2012.

Let's add another smartphone OEM to the list of aspirational chip makers: Lenovo. While Lenovo doesn't have much smartphone presence in the U.S., the company is currently the second-largest smartphone vendor in the world's largest smartphone market. Smartphone shipments in China reached 186 million last year and are predicted to climb to 268 million this year -- 44% growth.

Source: Strategy Analytics.

Lenovo is reportedly planning to hire more chip engineers later this year, growing its team by tenfold to 100 engineers. Up until now, Lenovo has tapped a wide range of chip suppliers. Lenovo was among the first OEMs to give Intel's Atom mobile processor a chance in its LePhone K800 last year.