Strategic Technologies

• 01Sep

  Intel’s Latest Attempt to Buy Cellphone Chip Market Share

  RF & Wireless Components, Handset Component Technologies (HCT) No Comments

  Consolidation in the baseband market continued with Intel acquiring Infineon’s wireless business on Monday for $1.4 billion. Infineon’s takeover is the fourth high-profile announcement in the last two years. Previously NXP, Freescale and Texas Instruments announced their exits from the merchant baseband market. This signals that the entry barrier is now too high for new entrants and raises pressure on smaller players such as Marvell, Spreadtrum and Icera. Intel’s acquisition of Infineon’s wireless business leaves Qualcomm, MediaTek, ST-Ericsson, Intel, Broadcom and Renesas as long-term players in the cellular baseband market.

  We analyzed this back in May when the original rumour of the Intel/Infineon wireless deal surfaced. Infineon’s wireless business is definitely an attractive target for Intel as it gives immediate access to valuable IP and an established customer base. Infineon is a rising star in the W-CDMA baseband market and ranked number two in the W-CDMA baseband market behind Qualcomm (excluding Texas Instruments’ custom baseband business with Nokia). Infineon has so far focused on slim modems and has stayed away from developing ARM-based applications processors. So far Infineon’s niche strategy has paid off, but the time has come for the company to expand its portfolio by offering a wider range of processors to address smartphones, tablets and other connected consumer devices. Although 3G and smartphones are of most interest to Intel, the company is likely to keep Infineon’s 2G business as it provides scale which is crucial to play in the cellular baseband segment.

  It will be another year or two before Intel’s applications processors are smartphone-ready. Meanwhile, in the next 12 - 18 months Intel can bundle Infineon’s 3G platform with all of its notebook and netbook chipsets and gain significant 3G share to undercut Qualcomm and ST-Ericsson’s non-handset offerings. But both Qualcomm and ST-Ericsson appear to have a two year technology lead over Infineon in chipsets for HSPA+ and LTE; Infineon is expected to introduce its first HSPA+ chipset in 2011 and an LTE chipset in 2012. MediaTek’s grey handset chip business may come under pressure from Infineon in the future if Intel expands its field application engineering force in China. Likewise, Broadcom is expected to come under pressure from this deal but should survive with help from its other businesses such as connectivity and digital home. This acquisition will also likely affect stand-alone application processor vendors such as Texas Instruments and NVIDIA that currently lack their own 3G / 4G modems. But we believe that it will take another 4-5 years for Intel to integrate basebands into its Atom CPU, if at all.

  Infineon’s acquisition still doesn’t guarantee Intel’s success in the wireless handset market and the company’s ultimate success in this market hinges on how soon Intel can come up with power-efficient processors that can stand-up and compete against a host of ARM-based processor vendors. On a positive note, Intel appears to be moving ahead of its other chip competitors in the software area which positions it well against ARM-based processor vendors. The company’s strong software expertise could help it to gain some OEM mindshare. Intel’s uninspiring track record in the wireless market during the last decade suggests that the company has to execute flawlessly this time to make it successful and keep Infineon’s wireless business as independent as possible. Clients can read our eight page analysis of the Intel/Infineon deal here.

  Posted by skundojjala @ 5:06 pm

• 27Aug

  Smartphone Processor Market up for Grabs

  Stuart Robinson, Sravan Kundojjala, Handset Component Technologies (HCT) No Comments

  As smartphone shipments grow as a percentage of total mobile phone shipments, processor suppliers also have to revise their strategies to tap into this growth. Who is well-positioned? We think baseband vendors are well positioned to capture this growth given their leverage to work their existing OEM relations. To make the transition from the featurephone world to the smartphone world, processor vendors have to develop application processors and multimedia processors in addition to cellular baseband processors.

  The game is no longer about slim modems. Based on our research many of the leading baseband vendors are missing the growth opportunities in the smartphone segment. Estimates in our recent report entitled “Can Baseband Vendors Translate Their Success into the Smartphone Market?” reveal that the cumulative smartphone apps processor unit shipment share of Qualcomm, ST-Ericsson, MediaTek, Infineon and Broadcom was just 21 % in 2009 despite their cumulative overall baseband unit shipment share of about 65%. What this means is that baseband vendors have not been too successful in converting their baseband design-wins into apps processor design-wins so far.

  A chip vendor’s success in the smartphone world comes from scoring design-wins at top-tier smartphone OEMs and supporting software platforms that have market momentum. This is one of the reasons why baseband vendors missed the smartphone boat as many of them were focusing on feature phone and basic phone segments. We think there is enough room for dynamism in the smartphone processor market as new entrants like Intel come into the value chain. If Intel acquires Infineon, as rumoured, that could put more pressure on stand-alone processor vendors, such as NVIDIA, that currently lack baseband products. Interesting times ahead. We’ll be watching how baseband vendors expand their value offering to crack the smartphone and other emerging devices markets.

  Posted by skundojjala @ 12:24 pm

• 24Aug

  Vertical Mobile Software Stacks: Good or Bad?

  Stuart Robinson, Sravan Kundojjala, Handset Component Technologies (HCT) No Comments

  It’s hard not to see that mobile software platform players are positioning themselves as a one-stop shop to offer an integrated experience to their target customers. What this means is that more and more 3rd party functionality and apps are now built right into the core of the platform. This kind of software verticalization is good only as long as the core platform functionality outclasses the stand-alone 3rd party functionality. But the problem starts when a platform vendor packs an inferior solution into the core of the platform and limits platform flexibility. This could threaten that platform’s long-term credibility too. For example, if a mobile software platform player is bundling their own browser, media player, and internet services with the core platform they should make sure that these applications and functionality are comparable to other best-in-class solutions.

  There are couple of ways a mobile software platform player can avoid inferior solutions into its software stack:

  • By acquiring 3rd party companies that provide superior functionality over the platform’s core functionality

  • By ensuring that their platform is flexible enough to accommodate 3rd party functionality integration

  Now let’s get back to some real world examples. Android has so far proven flexible enough to accommodate 3rd party innovations that are superior to Android’s built-in functionality. For example, some OEMs replaced the built-in onscreen keyboard with SWYPE; other OEMs replaced built-in multimedia functionality with their own stacks; and some OEMs even replaced Google’s built-in internet services. This is one of the advantages with open source platforms. However, the down side of this flexibility is that the platform’s consistency is compromised resulting in delayed updates to consumers. If Google stops OEMs from customizing Android then the platform could potentially suffer from a lack of innovation as Google becomes the single source of innovation. Now let’s take a contrasting case: Microsoft’s Windows Phone 7 (WP 7). With WP7 Microsoft appears to be taking control of the platform experience by limiting 3rd party apps to replace core platform experience. It seems that Microsoft is building much of the 3rd party functionality into the platform itself which could limit 3rd party innovation. The downside of this approach is that Microsoft needs to be at its best to make sure that the platform’s core functionality is superior to 3rd party functionality. Failing to do so could result in losing share to more flexible open source ecosystems.

  This is definitely an interesting dynamic to keep an eye on as mobile software platform players increasingly try to integrate 3rd party functionality into the core of their platforms. Winners will be those who strike a balance between consistency and flexibility. There seems no clear winner in this aspect for now as many players are still in the process of building integrated mobile software platforms.

  Posted by skundojjala @ 7:04 pm

• 12Aug

  Webinar: How Many Android Phones Did You Say There Are?

  Uncategorized, Steve Entwistle, Stuart Robinson, SpecTRAX, Handset Component Technologies (HCT) No Comments

  Hear insights from Stuart Robinson, Director of Strategy Analytics’ SpecTRAX service, who will talk about the important trends in recent global cellular handset model announcements.

  Join us on Thursday 9th September for a complimentary live online webinar.

  

  Topics covered by the webinar include:

  • OS penetration; how many phones feature Android compared to LiMo, Windows and Symbian?
  • Analysis of current spec trends; Bluetooth, touchscreen, QWERTY, form factor, screen & camera resolution….
  • Shelf share analysis by region; which carriers offer the most Android phones?
  • Typical specs of Android phone vs handsets running other operating systems

  The webinar is targeted at existing clients of the SpecTRAX service as well as product planners, product marketers and portfolio managers across the industry.

  Attendance to the webinar is free however pre-registration is required. REGISTER –>>>

             Date:                 Thursday 9th September 2010

             Duration:           30 minutes, followed by 15 minutes Q&A

             Time:                  2pm BST UK / 9am EDT Boston, repeated at 5pm PDT LA

  Once we have processed your registration, you will receive a confirmation email message with instructions on how to join the event.

  Feel free to forward this message to your colleagues who may be interested in this webinar.

  Posted by sentwistle @ 3:55 pm

• 11Aug

  Webinar: The Future of Electronic Component Demand from Military Radio

  Uncategorized, Advanced Defense Systems, Steve Entwistle, Asif Anwar No Comments

  >

  The next generation of military tactical radios will serve as nodes and hubs in mobile, ad hoc networks which will connect ground-based, sea and airbourne assets. Achieving this requires changes in radio architecture that wil profoundly impact future electronic component demand from this defense sector.

  Strategy Analytics’ Advanced Defense Systems (ADS) invites you to join a 40-min complimentary webinar, including Q&As, on 1 September at 4pm BST or 11am EST. A replay will be available at 4pm PDT. Participants will have the option to submit questions.

  

  Click here to register for this webinar and we will send you the details, so that you can join us online to learn about and discuss these topics. Alternatively, if you are unable to join in but would like to find out more, please email SEntwistle@strategyanalytics.com with your enquiry.

  Posted by sentwistle @ 11:30 am

• 06Aug

  Will the F-35 be the best selling FIGHTER AIRCRAFT in the world for the next 20-30 years?

  Advanced Defense Systems, Asif Anwar No Comments

  I came across this discussion in the Aerospace & Defense group on Linkedin (http://tinyurl.com/2fdo8dv ), and added our own thoughts on this topic. 

  Firstly, I don’t think there is any question the F-35 is envisioned to be the largest production fighter, both in terms of quantity and contract value in the next 20-30 years.

  The program is primarily backed by the US, but the United Kingdom, Italy, the Netherlands, Canada, Turkey, Australia, Norway and Denmark are also participating. The US fleet of fighters is ~2400 and this is ~2x the next largest country (Russia). In addition to the US planning to replace all/most of its fighters with F-35s over time, the other partners have agreed to procurement schedules that would bring the potential quantity of F-35s into the 3000-3100 range. This quantity does not include Israel with ~400 fighters, all purchased from the US and therefore a very likely candidate for the F-35 also.

  As a point of reference, the total estimated fighter inventory of the next three largest air forces (Russia, China and
  India (who has purchased a sizable number of US fighters and may also be an additional future home for F-35), is ~2600.

  I am not suggesting that other fighters such as the F-16s, F-18s, Gripens, Eurofighters, MiGs etc will not compete against the F-35 at all over the next twenty to thirty years. Certainly in terms of cost, these platforms have significant advantages and this cost advantage is being augmented by technology improvements, e.g. the implementation of AESA radar. Furthermore, jointly developed platforms such as the JF-17 (Chinese-Pakistani project) will also lock out some potential sales even if the F-35 was a cost comparable option.

  However, I would suggest that even if there were only one fighter competitor to the F-35 (and as we note above, there are several), no other fighter platform has the potential to reach a larger quantity than that already “committed” to for the F-35, even if the final quantities sold do not match the “committed” values.

  In addition, the cost of the F-35 is significantly higher than current fighters. One estimate I saw has the cost of an F-35 ranging somewhere between $65 and $120 million (some estimates place it as high as $200 million), versus $50 million for an F-16. The substantially higher cost per plane and large quantity will make the TAM of the F-35 dwarf that of the other fighter jets.

  Now, off course the fly in the ointment also relates to the cost. With big overruns and schedule slippages, cracks have appeared in the solidarity of the 9 development partner countries. I saw some references that some countries are re-thinking whether they need the capability (and cost) the F-35 brings. On the other hand, Canada’s Defense Minister, this month, reiterated Canada’s support of the program and its procurement plans.

  However, as an international program, geopolitical and purchasing pressures will leave some US-friendly countries with no alternative but to buy the F-35 and this again leads to the conclusion that we will see a potential production run approaching 3000 over the timeframe.

  Another and perhaps the biggest wildcard in this analysis is the future of the program. As recently as January 2010, the
  US Deputy Secretary of Defense re-affirmed US (and partner country) commitment to the F-35 program. I suppose with the US deficit growing steadily, US military strategy gearing more toward smaller, regional conflicts and a lot of resources tied up in
  Afghanistan, it would not be completely surprising if there was some change in future budget allocations (think F-22/DDx/CGx ). That would, however be a major event that lobbying would likely delay for several years.

  So, short of a major upheaval in geopolitical relationships and/or a program cut, it appears the F-35 will be both the quantity and even more so, market value leader for the next 20-30 year period.

  Posted by Asif @ 5:49 pm

• 27Jul

  MediaTek Plans for the Future with an LTE IP License Agreement with NTT docomo

  Handset Component Technologies (HCT) No Comments

  MediaTek today signed an agreement with NTT docomo to license the latter’s LTE IP. MediaTek is a significant player in the WiMax baseband market but currently lacks an LTE roadmap. The company clearly has challenges in addressing the higher-end market, but in the last year alone it has made three important moves to strengthen its position: Firstly, the company licensed W-CDMA IP from Qualcomm in 2009; secondly, the company joined the Symbian Foundation, Open Handset Alliance and also partnered with Microsoft to improve its smartphone position; and thirdly, the company is now making a move to secure its position in the LTE chipset market. We expect the LTE terminal chipset market to be highly competitive with incumbents and startups all fighting for share.

  MediaTek is currently second only to Qualcomm in the cellular baseband processor market but the company could easily cede its position without significant improvements in the 3G / 4G, smartphones, tier-1 vendors and tablet areas. As we noted in a previous report, MediaTek clearly has to develop products to address tier-1 handset OEMs, smartphones, and UMTS phones. Based on our estimates, MediaTek had less than 1% share in smartphones for its integrated processors in 2009. The company currently lacks stand-alone application processor products and its current line up of integrated processors is only good enough to address entry-level smartphones. We believe that MediaTek may have to go for an acquisition to strengthen its 3G / 4G modem IP and CPU design expertise to attack the high-end smartphone and tablet markets. Without design-wins at tier-1 handset vendors it would prove difficult for MediaTek to grow its market share in these segments.

  Today’s announcement is further indication that MediaTek is not prepared to rest on its strong position in the GSM/GPRS/EDGE baseband market, but is looking for long term (evolution) strategies to gain market share in future growth areas.

  - Sravan Kundojjala

  P.S. This announcement is in contrast to the Japanese chip vendor Renesas which partnered with Nokia to develop LTE IP recently. Previously, Renesas licensed W-CDMA IP from NTT docomo to design its basebands.

  Posted by skundojjala @ 2:29 pm

• 19Jul

  Strong Growth Ahead for GaAs Substrate Markets

  GaAs and Compound Semiconductors, Asif Anwar No Comments

  The slowdown in the GaAs industry supply chain extended through to the first half of 2009, but a robust recovery in the second half resulted in SI GaAs substrates volumes, both bulk and epi, still growing year-on-year. Orders started to filter through in the second quarter of 2009 as end-users looked to re-build stock levels and  Strategy Analytics models show that by the end of the second quarter, the market had started to see robust demand for materials and devices through the whole GaAs industry supply chain. 

  While we continue to see silicon technologies encroaching further into traditional markets for GaAs, we didn’t see any major paradigm shift in the architectural makeup of cellular terminals during the slowdown.GaAs-based power amplifiers and switches continued to be the incumbent technology in the RF (radio frequency) front-end. This is especially true for the next generation of phones, where our previously forecasted trends of multi-mode and multi-band operation are especially relevant.  

  Significantly, not only will GaAs technology be central to supporting the fastest growing “smartphone” category of cellular handsets, but there is also an increase in the ratio of PAs per terminal as well as more complex switching requirements. This will drive up demand for HBT and pHEMT devices and the subsequent demand for epitaxial and bulk GaAs substrates. 

  Augmenting this demand from cellular handsets will be the uptake of wireless broadband based on cellular radio technology implemented in notebook computers, USB dongles as well as other platforms including M2M and energy monitoring markets. Adding to this demand will be increasing functionality such as Wi-Fi and GPS being incorporated into handsets, which provides additional opportunities for GaAs technology. 

  Strategy Analytics’ studies are projecting five-year compound annual average growth rates of up to 12%, translating into volumes growing by as much as 160% through 2014. Clients can access the latest reports and data models outlining these forecasts,

  • Semi-insulating GaAs Substrate Markets: 2009-2014
  • Markets for SI GaAs Substrates: 2009-2014 (data table)
  • Markets for SI GaAs Epitaxial Substrates: 2009-2014
  • GaAs Epitaxial Substrates 2009-2014 (data table)

  With the industry currently facing a feeding frenzy as demand for smartphones continues to outstrip the rest of the cellular handset market, are these growth projections too low? Let us know what you think.

  Posted by Asif @ 5:17 pm

• 16Jul

  BlackBerry Curve 8520 Takes Shelf Share Top Spot in Q1 2010

  Stuart Robinson, SpecTRAX No Comments

   

  Our SpecTRAX Q1 2010 shelf share analysis of 140 mobile network operators revealed that Research in Motion’s BlackBerry Curve 8520 moved up one place to top the chart, appearing in the product portfolios of 58 of the 140 network operators tracked in 29 countries around the world, more than any other handset model at the time.

  The BlackBerry BOLD 9000 was finally pushed off top spot in Q1 2010, having been the model appearing on most network operators’ shelves during 2009. Research in Motion’s Curve 8520 moved up from second place in Q4 2009 to take first place in Q1 2010, ahead of 3 variations of the iPhone and the RIM Onyx. Nokia’s highest ranked phone in this shelf share anaylsis was the N97 taking sixth place.

  

   

  The report also summarises the key features and trends of 61 new handsets that were announced during May 2010 for which detailed specifications were available. Highlights from May’s 61 new handset announcements include:

  • Penetration of Bluetooth, WiFi and GPS in new handsets are at their lowest levels for over a year, due to an increase in the number of low-end model announcements.
  • 25 touchscreen phones (41% of the 61 new models), 21 of which are using capacitive and only 4 of which are using resistive technology;
  • 55 new models (90%) were announced with a memory card slot, all of which are microSD-based. Six of these models can support 32GB memory card capacity (microSDHC) and a further 19 support cards up to 16GB.

  The lower than average specs during recent months can be attributed in part to a higher than normal number of entry-level phones being introduced by several Tier 2 and Tier 3 handset vendors, mainly for China, India and other emerging markets.

  The full 11 page SpecTRAX report can be accessed by clients here: BlackBerry Curve 8520 Takes Shelf Share Top Spot in Q1 2010
  http://www.strategyanalytics.com/default.aspx?mod=ReportAbstractViewer&a0=5626

  Stuart Robinson

  Follow me on Twitter: @Stuart_Robinson

  Posted by Stuart Robinson @ 1:45 pm

• 06Jul

  Nokia Partnership Could Help Renesas Expand Outside Japan

  RF & Wireless Components, Handset Component Technologies (HCT) 3 Comments

  Nokia announced today that Renesas will acquire its wireless modem technologies business for $200 million and the transaction is expected to close before the end of 2010. Renesas has offered GSM PAs and transceivers for the mainstream GSM market for more than a decade but lacked basebands. More recently, Renesas entered the baseband market with W-CDMA basebands for Japan and plans to provide complete chipsets and PAs for the global market. Renesas merged with NEC Electronics in April 2010 and most recently joined the Symbian Foundation.

  Previously Nokia transferred its 3G IC design operations to ST-Ericsson, licensed its W-CDMA/HSPA modem technology to Intel and collaborated with Infineon for LTE RF transceivers development. This announcement raises a question whether Nokia will continue to own the IP and earn royalties for legacy basebands, GSM through W-CDMA / HSPA+?

  This is a significant development considering Renesas’ lack of baseband design-wins outside Japan. Strategy Analytics estimates that Renesas and NEC Electronics cumulatively held just 1.3 percent of the baseband market (in revenue terms) in 2009. Renesas originally licensed baseband technology from Japanese network operator NTT docomo to produce the SH-Mobile G series baseband processors, which also integrate Renesas’ application processing technology. Most recently Renesas sampled a fourth generation of SH-Mobile G baseband processors, the SH-G4, which supports the HSPA air interface.

  This partnership with Nokia provides Renesas with three different sources for fundamental 3G modem IP, NTT docomo, NEC Electronics and Nokia. This situation is similar to ST-Ericsson’s, which also has three different 3G modem IP sources, EMP, NXP and Nokia. It appears that Renesas will use Nokia’s 3G modem technology to compete for design-wins outside Japan. The combined entity of Renesas and NEC Electronics now boasts Fujitsu, Sharp, NEC, Sony Ericsson and Panasonic as its baseband customers . Renesas’ expansion into the global baseband market would increase competition in the marketplace.

  This move comes at a time when the 3G market is growing, accounting for close to one third of global cellular baseband revenues in 2009. Nokia’s existing 3G chipset suppliers include Texas Instruments, Qualcomm, Broadcom, ST-Ericsson and Icera. It is worth noting that the first Nokia 3G phones based on Qualcomm, Broadcom and ST-Ericsson’s basebands are expected to debut in late 2010 or early 2011. Infineon is noticeably absent in this list although Infineon is a key GSM/GPRS/EDGE baseband supplier to Nokia.

  We don’t expect the first products based on this partnership to debut until late 2012, the time when Texas Instruments completes its baseband exit. In 2013 Nokia’s 3G chipset suppliers list would include Qualcomm, ST-Ericsson, Broadcom, Icera, Renesas and potentially Infineon and Intel. While Nokia can afford to have multiple suppliers considering its scale we could see some further acquisitions and mergers among these baseband suppliers.

  Today’s announcement is likely to affect several companies…

  • ST-Ericsson: ST-E will probably be worst hit by this announcement as it brings into doubt the strong relationship ST-E has had with Nokia over the past 3 years. ST-E has spent the last couple of years consolidating the 3G technologies it acquired from EMP and NXP with Nokia’s 3G IP into its flagship processor the U8500 which is expected to appear in handsets at the end of 2010. Nokia will obviously be working with Renesas in future HSPA/LTE projects, thus potentially diluting the relationship with ST-E.

  • Qualcomm: Qualcomm has enjoyed a much more positive relationship with Nokia during 2009/2010 since the companies resolved their long-standing IPR legal battles. Qualcomm is expected to supply chipsets to Nokia for its upcoming W-CDMA/LTE products. Nokia’s stronger relationship with Renesas may now affect that.

  • Infineon: Why did Nokia not choose Infineon? Nokia and Infineon already have a close relationship around LTE RF transceivers, but Nokia may have considered Infineon’s expertise in HSPA and LTE modems to be too weak.

  • NTT docomo: Renesas currently licenses 3G modem IP from NTT docomo for use in its SH-Mobile G processors which are desgined into handsets from Sharp and Fujitsu. Renesas’ strong relationship with Nokia now makes it more likely that Renesas will use NTT docomo’s IP for products aimed at the Japanese market, and will employ Nokia’s HSPA/LTE IP in new chipsets for us in Nokia handsets. It will also allow Renesas to expand its client base beyond Japanese waters.

  Posted by skundojjala @ 4:46 pm

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