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Viewpoints

Cell Phones Still Provide Opportunities for Specialized Analog and Mixed-Signal ICs

By Stephan Ohr, Research Director, Analog and Power, Gartner Technology and Service Provider Research

Steve Ohr

Despite the worldwide economic downturn, which will reduce the number of mobile handsets produced in the next year or so, the proliferation of feature-laden 3G phones will provide slots for analog and mixed-signal devices. We anticipate opportunities for video and audio output devices, mobile TV, high-resolution camera modules, global positioning systems and Bluetooth transceivers?in addition to the proliferation of specialized power management ICs. The popularity of the Apple iPhone and iPhone 3G, in addition, has spurred a raft of look-alike products featuring positional sensors and touch screen controllers.

The effects of the worldwide recession on the semiconductor industry, to be sure, will be quite severe in terms of revenue contractions. Gartner had projected in mid-November that the semiconductor revenues would likely drop $40 billion in 2009 from a once-projected $308 billion to a more likely $268 billion. The losses could be greater as economic conditions continue to worsen. This reflects a drop off in consumer spending on PCs and cell phones―but not a dead stop. Gartner projects PC shipments will grow 5% in 2009 (though not the 13.6% previously projected), driven by demand for mobile computers (rather than desktops). Cell phone unit growth will be 2.9% (rather than the 8.8% previously projected), though the latest projection from Nokia suggests their unit shipments in 2009 will be down from 2008.

But even with a mere 2.9% unit growth, the total number of handsets shipped worldwide in 2009 will exceed 1.2 billion units. While some 300 million of these will be basic phones, intended for new users in developing regions of the world, some 500 million will be 3G phones with advanced feature sets. Of these, some 34% percent (188 million units) will likely be PDA/smart phone combinations. These units will have a number of features designed to increase their appeal to consumers (if not their utility to business people).

Newer feature phone applications include an increased number of digital camera functions (with both high and low resolutions), Bluetooth wireless connectivity, GPS, FM radio and MP3 music playback. Some phones will incorporate mobile TV receivers. This profusion of functions will cause revenues for application-specific analog ICs executing these new functions to rise at a 6.0% CAGR from $7 billion in 2007 to $9.5 billion in 2012. The average selling price for a 3G handset incorporating these functions (the cost to the service provider) will be roughly $200 in 2009, but will be closer to $155 in 2012. The semiconductor content, roughly $40 in 2009, will be about $32 in 2012.

The Amazing Disappearing Bluetooth

The shrinking dollar volume is a reflection of semiconductor integration which, in our industry, perpetually reduces the price-per-function. Because of the enormous volumes associated with mobile handsets, OEMs (and their manufacturing surrogates) will continue to invest in custom integrated circuits (ASICs and ASSPs) in an effort to reduce chip counts and manufacturing costs. In Gartner’s content models for cell phones, certain functions will seem to disappear—not because they aren’t used, but rather because their features and functions are integrated with a larger system-on-chip. Certain wireless functions associated with Bluetooth transceivers are one example: Already, FM radios are being integrated with Bluetooth transceivers. In the near future, the Bluetooth chip will likely include Wi-Fi and WiMAX transceivers. Despite this level of integration, we expect the price of the Bluetooth function—$2 not all that long ago—to approach 25 cents within the next few years. Other cell phone features will proliferate and drop in cost.

Hong Kong Star Ferry

Location-based services—like the ability to locate and map the nearest Starbucks—will be part of the feature set of new-generation smart phones. These depend on GPS receivers, which are another type of application-specific analog IC. The percentage of smart phones and PDA phones incorporating these devices is likely to be close to 50% in 2012.

Gartner had initially projected that the locator service device in each cell phone—the mechanism that allows police and medical service vans to locate a 911 caller—would not likely be transformed into full navigation systems. One line of thought believed that maps and other navigation aids would be unreadable on a tiny cell phone LCD screen. But technology developments and consumer preferences are refuting this assumption. The pixel resolution of a 2-inch LCD screen is amazingly high. And the overwhelming popularity of the Apple iPhone, with its larger LCD viewing screen, would have been hard to predict in advance. An increasing number of PDA phones will incorporate the larger viewing area, which will be friendlier to GPS navigation maps. As with Bluetooth, we estimate that the cost of GPS chipsets in smart phones and PDA phones will drop steeply between now and 2012.

There is a bit of controversy on the extent to which mobile TV tuners will be incorporated into cellular handsets. They can be extremely taxing to battery life, provoking a choice among users as to whether the handset will be used as a mobile TV or whether it will used as a telephone—but it will hardly support both. It is likely that the sale of TV-equipped cell phones will be smaller in the U.S. than in Europe, Japan and Asia. In the U.S., where cell phone users commute to work by car, they will seldom have the opportunity to view a TV program or video download on their cell phone screens. In other parts of the world, where commuters use public transportation, cell phone video will be more common—but for the issue of power consumption.

Commuters may find themselves watching a video on the train ride to work, and then immediately plugging their phones into a charger to replenish the battery as soon as they reach their offices. While the percentage of worldwide phones embodying mobile TV tuner chips is likely to be small—8 or 9% of enhanced phones in 2012, the penetration of FM radio tuners will be higher (26%).

On a taxicab ride from Kowloon to Hong Kong Island recently, I watched a colleague withdraw a stick antenna from his mobile handset, and tune in a local TV station. The off-brand Chinese-made handset included a dual Sim-card, a 3-Mpixel camera, Bluetooth 2.0, a QVGA LCD display with touch screen control, MP3/MP4 playback and MicroSD slot, an FM receiver, analog TV receiver and built-in miniature speakers. My Gartner colleague said the street price of the phone was $107 and its bill-of-materials (BOM) was $39.


About the Author

Stephan Ohr is Director of Research for Analog Semiconductors (and power management devices) at Gartner Research in San Jose. He tracks standard linear ICs (amplifiers, data converters and voltage regulators) as well as market-specific analog parts (such as disk drive read channels, display drivers and MP3 audio codecs).

Steve Ohr spent much of his career as an electronics trade journalist: He joined Gartner from EE Times, where he covered analog, and served as the editor of Times’ “Planet Analog” magazine supplement. His credits include Electronic Design magazine, Computer Design and Asian Electronics Engineer.

His engineering degree comes from the New Jersey Institute of Technology (the Newark College of Engineering), and his graduate degree (in sociology) comes from Rutgers. His hands-on engineering experience includes marketing assignments with Signetics (later Philips Semiconductors, and now NXP) and the General Electric Company.

Gartner Dataquest
Stamford, CT
(203) 964-0096
www.gartner.com

This article originally appeared in the January, 2009 issue of Portable Design. Reprinted with permission.


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