|Issue:||Europe I 2015|
|Topic:||Semiconductor synergies in mobile solutions drive the 5G future|
|Title:||VP, Semiconductors & Components|
Dale Ford, Vice President, Semiconductors & Components, IHS
Dale Ford is a well-respected industry analyst with years of experience producing award winning market research. At IHS, Ford manages the research teams responsible for competitive analysis, forecasting, and supply/demand research of the electronics, semiconductor and electronics components industry. In addition, Ford focuses on research and enhanced visibility on the products, technologies, and players shaping the wireless communications market.
Previously, he was chief analyst and director for Dataquest/Gartner Group, where he lead a team that delivered market research in seven syndicated services covering semiconductor applications, supply and pricing, and detailed equipment analysis
Ford earned a Bachelor of Science degree in Electrical Engineering with honors from Brigham Young University and an Masters of Business Administration from The Wharton School.
The history of the mobile communications and semiconductor markets illustrates that strong synergies exist between these two major drivers of technologies, markets and the overall economy. Given that semiconductor suppliers must begin developing solutions at least two years ahead of the introduction of 5G products and services, they are keenly interested in not only responding to but also playing a central role in the creation of the standard. In addition to providing an understanding of what can be accomplished theoretically, semiconductor companies know what is possible in commercial production at costs that will support consumer price points
The relationship between advances in semiconductor technology and the growth of mobile communications is profound: Every major development in the mobile handset and tablet market has required prior advances in semiconductor technology. Indeed, the challenge to provide solutions for the wireless and mobile world has been a key driver of the semiconductor industry for more than a decade.
Semiconductors spur growth
In the transition from analog solutions to the digital mobile communications era with the arrival of 2G handsets, the new phones required semiconductors equipped with digital signal processors (DSPs) tailored to perform the modem function for the new algorithms used in time division multiple access (TDMA) and code division multiple access (CDMA) air interfaces. Integrated implementations followed with the radio frequency (RF) transceiver that allowed the creation of single-chip solutions for the entire radio, excluding the power amplifier, which in turn opened up markets in the developing world for mobile handsets with ultra low cost handsets (ULCH).
The higher data rates supported by 3G set the stage for the introduction of the modern smartphone with the sales of the first iPhones starting in mid-2007. The advent of the smartphone, followed by the tablet, has caused the current surge in growth in the wireless market—not the earlier introduction of higher data rates with 3G technology.
An analysis of the data presented in Figure 1 shows that both historic and future growth of the mobile communications industry are tied to advances in the solutions offered by smartphones, and 3G and 4G play only supporting roles. This correlation is shaping current discussions on what 5G technology should look like and what capabilities it must deliver when it is introduced in the 2020s. It will not be enough to merely deliver advances in data rates. In order to garner the required investment for this next wireless generation, it is critical that the new technologies deliver another increase in value to the consumer in order to trigger spending that in turn drives profits up the value chain, from retailers and service providers to software and applications suppliers, equipment manufacturers and semiconductor suppliers.
The phone phenomenon
Combined shipments of mobile phones, smartphones and tablets jumped to 2.11 billion units in 2014, up from 1.26 billion in 2007, a rise of 67 percent. More impressive is the dramatic jump in value delivered to consumers reflected in the 182 percent increase in factory OEM revenue, which grew to US$420 billion in 2014 from less than US$150 billion in 2007.
This success has been critical in driving growth in the semiconductor market as microchips for these mobile devices have expanded to account for nearly 29 percent of the total semiconductor market in 2014, up from about 13 percent in 2007. This segment is projected to grow to 33 percent of the market by 2017. Major segments of the semiconductor industry show even more dramatic growth: Between 2007 and 2014 the share of semiconductor revenue for mobile communications grew from 2 percent to 42 percent in DRAM, 6 percent to 56 percent in data flash, 16 percent to 43 percent in logic application specific ICs, 30 percent to 68 percent in image sensors and 7 percent to 38 percent in sensors.
The smartphone has driven demand for new multi-core, low-power processor architectures such as ARM, leaps in the memory storage capacity and performance with data flash and mobile DRAM, image sensors and MEMS sensors, connectivity solutions with Bluetooth and other PAN and WAN implementations, advanced RF and power amplifier devices and more.
The powerful economies of the semiconductor industry, also illustrated in Figure 1, show that the factory OEM revenues will grow by nearly 3.7 times the growth in semiconductor revenues between 2007 and 2018.
Figure 2 shows how pure silicon demand measured in millions of square inches has tripled between 2007 and 2014.
Figure 3 highlights how mobile products drive demand for the most advanced semiconductor manufacturing solutions as they grow from accounting for ten percent of the silicon from leading process geometries—smaller than 28 nanometers (nm)—In 2009 to a projected nearly 50 percent by 2019. Silicon produced at the 40 and 65 nm nodes for mobile products will grow from less than seven percent in 2007 to 46 percent in 2017. As the industry pushes to the next node of seven and ten nm process geometries and up to 300 mm wafer sizes, mobile solutions will remain key drivers.
The way forward for wireless
The history of the mobile communications and semiconductor markets illustrates that strong synergies exist between these two major drivers of technologies, markets and the overall economy. Given that semiconductor suppliers must begin developing solutions at least two years ahead of the introduction of 5G products and services, they are keenly interested in not only responding to but also playing a central role in the creation of the standard. In addition to providing an understanding of what can be accomplished theoretically, semiconductor companies know what is possible in commercial production at costs that will support consumer price points.
Discussions related to the 5G standard have included proposals to increase the data rate from 1 gigabit per second (Gbps) to ten Gbps, but other improvements may have equal or greater emphasis; It will all depend on what can deliver true value down to the consumer. Given the increasing data demands in the network, current solutions in development seek to support 1,000 times the current data capacity on the network more efficiently to lower the required investments in infrastructure by operators. Improvements in contiguous coverage and in latency are also central to discussions regarding 5G as well as converging fiber with the wireless network. In a world where Internet of Things (IoT) deployments are rapidly expanding, adaptability and scalability will be critical as the number of devices continues to increase. The ever-pressing issue of cost, security and energy efficiency will overlay all standards and design decisions.
5G moves to the center of the new network
Some specific areas such as leveraging currently available bandwidth and opening up new spectrum through carrier aggregation are already making progress as part of a 5G solution. The possibility of building on the presence of LANs and hot-spots is also being drawn into the equation. However, most discussions are still at the conceptual stage. Perhaps most fundamental to the discussion of 5G is the fact that it needs to drive the creation of a more advanced network. The anticipated timing of 5G and the achievement of critical mass and broader adoption of cloud-based solutions will coincide in such a way that future solutions in both areas must be correlated. The power of the cloud will be central to the development of a new network, and without advanced wireless solutions like 5G, any cloud solution will be entirely inadequate.
It’s all about “Me”
Research conducted by IHS in 2008 developed the concept of the critical element of the “Me” point and radiating concentric spheres of interaction and observed its role in driving the design and architecture of mobile solutions. This concept was employed to+H7 project the adoption of key technologies in future mobile handset designs. Much of the original vision created in that study has been realized. The next major leap forward will involve the creation of a personalized and customized network of networks that delivers a significant increase in value delivered to the “Me” point.
Head for the cloud
Given the fundamental role of the cloud and 5G in the creation of this network of networks, it is anticipated that the architecture of mobile devices will change and will drive the creation of semiconductor architectures and solutions that are different from those that dominate mobile platforms today. For example, there will be more choices on where to perform processing functions—done in application processors today—and how and where to store data. These solutions will require greater investments in radio technology, sensing, communications processing and information presentation.
Solutions must perform new functions required by the 5G standard while costs decrease in other areas of designs in order to maintain key price points. This will involve deciding and delegating functions to be performed in the mobile device itself and those to be performed in the network/cloud. Semiconductor designs and technologies will be central to all of these choices and eventual decisions.
The old saying that “change is the only constant” certainly applies to the semiconductor and wireless worlds and all participants need to plan for the changes that are coming.
For more information, visit the Telecommunications Service at IHS Technology.