More than 550 million GPS-enabled mobile phone handsets will ship by 2012, market watchers predict.

ABI Research reports that community and social networking functionality, such as the sharing of points of interest and geo-tagged pictures, is becoming popular.

These services are expected to help boost GPS-enabled handset uptake as carriers, handset manufacturers and service providers look to capitalise on location-based services.

"While most CDMA handsets are already GPS-enabled, and GPS is set to become a standard feature in GSM smartphones, GSM feature phones are next on the agenda to be equipped with GPS," said ABI Research principal analyst Dominique Bonte.

"GPS chipset vendors increasingly target handsets, looking for new markets and spurred on by the recent dramatic growth of personal navigation devices."

However, Bonte warned that, as GPS begins to penetrate lower-end phones, the cost, power consumption and footprint of GPS chipsets will have to be further reduced.

This will be made possible by single chipset technology and the emergence in 2009 of combination chips integrating GPS, Bluetooth and Wi-Fi on one die.

Major silicon vendors such as Broadcom, NXP and Atheros are well positioned to develop such technology, ABI said.