Now that the technology is available, expect new services to follow.
Now that mobile network operators (MNOs) have started to advance their deployment of 5G networks, the industry is turning its attention to the critical question of return on investment. Optimizing ROI requires the monitoring of key metrics, including the average revenue per user and the global cost of the network. In this regard, 5G has been designed to be more efficient than 4G and, by extension, more efficient than all previous generations of communications technology.
At the end of 2020, all network carriers globally started to launch new services for consumers based on their 5G networks. The main new applications are virtual reality and augmented reality. The technological approaches for these two applications at the forefront of 5G innovation have been oriented toward high-quality streaming and immersive experience.
Immersion can come, for example, from multi-view–angle technology and can find some interesting practical implementations. One is virtual shopping, which could revolutionize the retail customer experience. Another strong developmental focus is cloud gaming, for which consumers need access to powerful platforms and for which strong, fast, low-latency communication is required. 5G coverage is an essential enabler for this specific, high-value, and rapidly developing application.
Hear from experts from Qualcomm, Rohde & Schwarz, Keysight Technologies, Movandi, EdgeQ, Infineon, and SPIL, who will share their insights and strategies—from the test and measurement, to semiconductor design and packaging, all the way to deployment and new applications and services—to stay ahead of this rapidly growing mobile technology.
An interesting characteristic of cloud gaming is that it is pushed not only by network carriers but also by the GAFAM companies (Google, Apple, Facebook, Amazon, and Microsoft), which have recognized the strong potential for development around the application. Expect to see the development of new services — and the creation of a new era for advanced digital communications — as an additional benefit of these companies’ entrance into the field.
As a result of these dynamics, with MNOs and GAFAMs working together on 5G adoption, this new generation of communications technology is penetrating the smartphone market even faster than LTE did more than 10 years ago.
The 5G smartphone market will more than double in 2021 from last year’s 226 million units, and 5G will represent 50% of smartphone sales between 2022 and 2023. Though 5G was driven mainly by the Chinese market in 2020, a clear acceleration can now be seen in the United States as well as in the Japanese and European markets. By the end of 2021, U.S. network providers will have started rolling out their C-band networks, with network carrier Verizon in the lead, thus spreading the 5G broadband network nationwide. This initiative, combined with the current efforts to deploy a 5G millimeter-wave (mmWave) grid with base stations, repeaters, and other means to improve coverage, will make the U.S. 5G network one of the fastest and most sophisticated in the world.
Smartphone OEMs to leverage RF front-end players’ expertise
Smartphone OEMs have upgraded their product lines, accommodating the latest air standard in each of their market segments so that consumers can get access to 5G phones starting from the low price point of US$150 for this new generation of products. Indeed, as was the case with 4G, there are multiple levels of 5G support, and they have direct repercussions on pricing. The bill of materials will vary depending on whether the phone supports mmWave, the number of 5G/4G band combinations, and so on. If we look closely at the RF front-end level — that is, at the semiconductor content responsible for the signal routing between the modem and the smartphone antennas — it appears that there is up to a fivefold difference in the bills of material between an entry-level 5G phone and a flagship 5G phone.
In any case, this new generation of communications technology is adding a lot more complexity to the signal routing and therefore adds semiconductor content for the RF front end compared with 4G. This challenging situation for smartphone OEMs represents an interesting business opportunity for all RF front-end players. Before 5G arrived, the RF front-end market was experiencing slow growth, in the range of US$11 billion to US$12 billion for the 2017–2019 period, mostly driven by OEMs’ willingness to include LTE advanced support in their products. As a result, most of the growth came from flagship phones.
In calendar year 2020, the penetration of 5G affected not only flagship phones but also mid-tier and entry-level phones. As a result, the RF front-end market jumped to US$14 billion, boosting the performance of all companies operating in this market, including Skyworks, Qorvo, Broadcom, Murata, Qualcomm, and others. As detailed in its report “Cellular RF Front-End Technologies for Mobile Handset 2021,” Yole Développement expects further growth in 2021, to US$17 billion, and an annual growth rate of 8.3% between 2019 and 2026.
Who will be the 5G RF front-end market leaders?
When 4G arrived, the RF front-end market landscape became completely consolidated and saw the exit of some big companies. The leading RF front-end companies were able to offer highly integrated components that solved the challenge of the complex radio path, and as a result, they now hold more than 85% of the market. 5G is no different; in fact, it only increases the complexity. Thus, companies offering a high level of integration should be well-positioned to tackle the RF front-end space.
Even as 5G is advancing, however, geopolitical issues are forcing a paradigm shift.
Indeed, the U.S.-China trade war has led to commercial sanctions against one of the leading OEMs, Huawei. That company today is in a tough situation and will survive only if it manages to develop an alternative supply chain without U.S.-based technologies. It is very likely that the other Chinese OEMs, fearing the same difficulties, will also push for an alternative supply chain to emerge in China. Indeed, we have seen many funding rounds there since 2018 from fabless companies dedicated to RF front-end development. Though still far from the scale of the current market leaders (Skyworks, Qorvo, Qualcomm, Broadcom, and Murata), these companies will try to take advantage of the Chinese smartphone OEMs’ dominant position.
With this emerging competition coming from China, U.S.-based market leaders will continue innovating to maintain their leadership positions.
This article was originally published on EE Times Europe.
Cédric Malaquin is a technology and market analyst specializing in RF devices and technologies for the Power & Wireless division at Yole Développement.