How to play emerging market smartphone growth in 2014

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As growth in the global smartphone market shifts from the developed to the emerging world, HSBC analysts have highlighted three stocks which they believe provide investors with the best exposure to the trend.

The global investment bank named Taiwanese semi-conductor company MediaTek, Chinese tech firm Lenovo and Shanghai headquartered semi-conductor company SMIC as the stocks best exposed to an expected rise in emerging market smartphone shipments next year.

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"The strong smartphone and tablet growth rates will continue for emerging markets where larger populations reside and 3G penetration rates remain low," the analysts said in a Global Research note published on Tuesday.

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While growth in the global smartphone market has exploded in recent times, with total smartphone shipments set to rise nearly 40 percent on year in 2013, according to research firm IDC, more recently demand from the U.S. and Europe has started to show signs of waning.

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According to HSBC analysis, global shipment growth is set to slow from an estimated 45 percent on year in 2013 to 25 percent in 2014. Developed market shipments will fall from 16 percent on year in 2013 to just 7 percent in 2014, meanwhile emerging market shipments are expected to clock up a healthy 33 percent on-year rise, although much lower than 2013's 70 percent increase.

"We continue to see the bifurcation in the smartphone shipment growth rates in the developed and emerging markets," said HSBC in its note.

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"We believe this shift in primary growth drivers to emerging markets will require investors to be more focused or targeted in their stock picking in 2014," the analysts added.

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HSBC highlighted MediaTek as the best way to play the burgeoning smartphone market in China due to its huge potential for growth. The analysts expect MediaTek's smartphone integrated circuit (IC) - or electronic chips - shipments to double to 228 million on year in 2013, and then by another 70 percent to 388 million in 2014.

Another favored stock was Lenovo, the world's fourth largest smartphone maker, and second largest in China, based on its fast market share gain in the Chinese smartphone market. HSBC expects Lenovo's smartphone shipments to grow 28.5 percent on year to 59.6 million units in 2014, giving its operating margin a boost to 1.9 percent, from 0.9 percent in 2013.

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Third and finally, HSBC highlighted SMIC as an optimal way to play rising smartphone demand in the emerging world. HSBC likes the stock because it derives 40 percent of its revenue from Chinese chipmakers such as Spreadtrum, RDA and All Winner, for example, while 15 percent of its revenue comes from Qualcomm, the world's largest supplier smartphone chips.

HSBC said a number of factors were set to drive keep emerging-market demand for smartphones next year. One example was that third generation mobiles - or 3G as they are commonly known- are still less than 20 percent penetrated in China, showing just how much potential there is for growth there. China's smartphone market is already bigger than the U.S. market, HSBC pointed out, underscoring the potential for growth.

—By CNBC's Katie Holliday: Follow her on Twitter @hollidaykatie