Wearables are suddenly looking like a red-hot growth market, and the list of companies benefiting from the development extends beyond Apple (AAPL) .
Research firm IDC recently estimated that total shipments of "wearables" -- a term that it uses to describe smartwatches and fitness trackers, along with wireless headphones that can do things such as modify audio or support voice assistants -- grew 94.6% annually in Q3 to 84.5 million. That's up from an estimated 85% growth rate in Q2, and raises the strong possibility that shipments in seasonally big Q4 will be above 100 million.
With the qualifier that the market's average selling price (ASP) is undoubtedly lower, IDC's numbers suggest that Q3 wearables shipments exceeded PC or tablet shipments (they're estimated to be at 70.4 million and 37.6 million, respectively). Only smartphones (358.3 million estimated shipments) were a bigger consumer electronics market in terms of unit volume.
Apple, which has been seeing Apple Watch and AirPods sales take off, is estimated to have shipped 29.5 million wearables in Q3, up from just 10 million a year earlier and good for a 35% unit share. As is the case for its smartphone, tablet and PC market shares, Apple's wearables revenue share is quite likely higher than its unit share.
The company has previously disclosed that its "wearables" sales -- defined as covering the Apple Watch, AirPods and both wired and wireless Beats headphones -- were up "well over 50%" during both its June and September quarters. And Bloomberg recently reported (citing people familiar with Apple's production plans) that AirPods shipments are expected to double this year to 60 million amid better-than-expected demand for the recently-launched AirPods Pro, which are currently showing a January 10th delivery date on Apple's U.S. website.
However, at least a few other firms also saw strong wearables growth in Q3. IDC estimates Xiaomi, Samsung and Huawei, the market's #2, #3 and #4 players, respectively saw their wearables shipments rise 66%, 156% and 203% in Q3. And while Fitbit (FIT) (the #5 player, now set to be acquired by Alphabet (GOOGL) ) is believed to have seen no unit growth, IDC thinks firms outside of the top-5 collectively saw their shipments rise 40%.
Aside from major hardware suppliers, the wearables market's growth is a boon for a slew of chip suppliers. Notable beneficiaries include:
- Cirrus Logic (CRUS) . Though best-known for its iPhone and iPad design wins, Cirrus has reported seeing growing sales of audio codec chips and audio amplifiers for both wireless and wired headphones, with the company often highlighting the noise-cancellation abilities of its codecs as a selling point.
- Maxim Integrated (MXIM) . Maxim has also reported seeing growing wearables-related demand. The company has landed audio codec design wins for multiple AirPods models.
- Knowles (KN) . Knowles is one of the world's biggest MEMS microphone suppliers, and is also a top supplier of balanced armature drivers used to improve audio quality, device size and battery life within wireless headphones. On its last earnings call, the company indicated that Amazon's recently-launched Echo Buds headphones contain 6 of its microphones and 4 of its balanced armature drivers.
- Qualcomm (QCOM) . Qualcomm's offerings for wearables include its Snapdragon Wear processor family and a line of Bluetooth/audio chips supporting noise-cancellation and the company's aptX wireless audio technology.
Just as Apple still gets far more revenue from the iPhone than the Apple Watch and AirPods, all of these chip developers still get a solid majority of their revenue from products other than wearables, and that probably won't change anytime soon.
However, following several quarters of rapid growth, the market is starting to look like a needle-mover for chip suppliers with good design win traction in the space, in much the same way that the Watch and AirPods sales now qualify as a needle-mover for Apple.
