Yole, a market research, technology and strategy consulting company, feels that the cellphone industry has entered a sharp transition toward 5G. 5G has strongly penetrated the smartphone market in 2020 and is expected to further grow as the network expands in China, in Europe and in the USA.
5G is leading to an unprecedented increase in the number of RF devices required in a smartphone. Smartphones now need to support the new 5G standards and bands as well as the older radio standards. The number of 5G phones is expected to more than double in 2021 compared to 2020, which is a significantly faster penetration rate than the LTE standard 10 years ago.
This rapid growth has resulted in hundreds of RF components that must be fitted into handheld format devices. It has now started to impact mid-tier and entry-level phones, not only flagships. 5G features implemented in handsets focus on improving download speeds and make the uplink more robust. In addition, there is an entirely new radio path created at mmWave frequencies, though this only applies to a few flagship phones right now.
First use cases of the technology have matured and mobile network operators (MNOs) are proposing new services to the consumer. MNOs are strongly motivated to invest more resources and to demonstrate 5G’s added value to the consumers, as 5G is not the first thing they are thinking about. In addition, MNOs have developed advantageous commercial 5G packages, particularly in China, adding some more motivation to consumers to upgrade.
A 5G phone is relatively more complex than a 4G phone at the RF front-end level. Therefore, it is worth analyzing the technical trends and anticipating future changes to understand this complex market better. Indeed, as for every new air standard, 5G represents a significant opportunity for industry players to differentiate, innovate and win the market in the end.
The Cellular RF Front-End Technologies for Mobile Handset 2021 report gives Yole’sview on the RF front-end market evolution and its associated ecosystem.
In addition, the reverse engineering and costing company, System Plus Consulting, offers in-depth semiconductor technologies analysis, including RF solutions in its Smartphone Design Win Quarterly Monitor. The company also proposes a technical and cost overview of the evolution of RF front-end module technologies integrated into 5G mmWave and Sub-6 GHz Phones in 2020 in the RF Front-End Module Comparison 2021 – Vol. 2 – Focus on 5G Chipset report.
Yole’s RF’s team estimates the RF content in a 5G phone to be about $5-8 higher compared to a 4G phone and an additional $10 for a mmWave version. As a result, the RF front-end market is booming. It should reach US $17 billion by the end of 2021, up from US$14 billion in the calendar year 2020. From there, the RF front-end market growth should start to slow. Average selling price (ASP) erosion will be stronger when 5G is mainstream and as competition grows further. Overall, analysts expect an 8.3% CAGR between 2019, the year of 5G’s introduction, and 2026, leading to a US$21 billion RF front-end market.
The introduction of 5G adds complexity to phones along with RF content. Building 5G phones using discrete components while keeping an acceptable form factor is a challenge, driving more integration. Mohammed Tmimi, PhD., RF Technologies and Related Markets Analyst at Yole, stated that the RF front-end market leaders all have flexible module offerings adapting to multiple market requirements. Besides that, some also have custom-built modules for the flagships. As a result, Skyworks, Murata, Qualcomm, Qorvo and Broadcom together share 85% of the RF front-end market. Skyworks is the market leader.
According to Stéphane Elisabeth, Senior Technology and Cost Analyst at System Plus Consulting: “At the end of 2019, Qualcomm had a smaller market share than the other supplier. This changed in 2020, with OEMs like Samsung. The share of Qualcomm almost doubled at the beginning of the year. Yet, the situation changed at the end of 2019 with the release of the Apple phones. Indeed, the iPhone series doesn’t integrate a lot of Qualcomm’s components in its design. The goal of Apple is to avoid the use of Qualcomm completely in the future.”
However, a variety of companies from China are emerging and experiencing double-digit growth in the RF front-end space. Most started in the discrete business with standalone LNAs or switches, which enabled them to accumulate know-how and establish trust with OEMs. The next step for these fabless Chinese companies is to bring integrated modules to the market. This has been supported by more investments in China over the past two years. It’s likely that not all will succeed, but we can expect more cooperation and consolidation over the next few years.
A major difficulty for success will be the access to wafer capacity. There is not a shortage of RF components per se, more like tightness in the industry. This is pushing long term supply agreements that only big players can afford.