Process Node Advancements to Shape Smartphone SoC Zero-sum Game

Article By : Counterpoint Technology Market Research

The global foundry strategy and chipset demand-supply dynamics are shaping the smartphone SoC competition.

The global foundry strategy and chipset demand-supply dynamics are shaping the smartphone SoC competition. According to latest research from Counterpoint Technology Market Research, due to the changing market dynamics, MediaTek is poised to dominate the overall smartphone chipset market in 2021 while Qualcomm is expected to do the same in fast-growing 5G smartphone chipset market. The competition has never been so fierce, as MediaTek has narrowed the gap with Qualcomm.

MediaTek and Qualcomm a Zero-sum Game

Talking about the importance of advanced process nodes for future 5G smartphone growth, Research Analyst Parv Sharma said, “For mainstream 5G smartphones, 6nm and 7nm are the major foundry nodes offering the best performance and price to AP/SoC vendors looking to more than double their shipment growth in 2021. MediaTek has successfully secured TSMC’s capacity since last year for its Dimensity 5G chipsets, a turnaround from 2019. This has helped MediaTek to go aggressive in targeting the high-volume sub-$250 (mid-tier) 5G smartphone segment. For example, we believe MediaTek’s allocations for OVX (OPPO, vivo and Xiaomi) are on the rise, from the 20-30% levels of 2020 to over 40% in 2021, coupled with a better supply outlook for these high-growth OEMs and their 5G portfolio ambitions. On the other hand, Qualcomm chipsets have been constrained for the first half of 2021, directly benefitting MediaTek as this has become a zero-sum game.”

Sharma added, “Qualcomm suffered from production constraints at 5nm in Samsung, and for other supporting peripheral ICs, in the first half of 2021. However, our supply chain checks indicate Qualcomm will catch up in the second half of 2021, securing more capacities from TSMC and other foundries to improve the supply and yield at Samsung in the coming months. This should allow the San Diego-based vendor to target the mainstream 5G market, mainly in China and elsewhere, with its Snapdragon 4, 6 and 7 series chipsets. 5nm is the most advanced node, which will be mainly used for 5G premium/flagship models during 2021. All eyes will be on Qualcomm to see whether it diversifies its foundry strategy in 2022 and takes some capacity share away from Apple, which leads in the advanced node capacity shares for its high-demand A and M series chips.”

This should help widen the lead in terms of value/revenue where Qualcomm benefits from a better product mix, with greater demand for its higher-ASP Snapdragon 7 and 8 series chipsets. Qualcomm’s system-level integrated offering expands the overall semiconductor opportunity from SoC to RFFE. Qualcomm is generations ahead when it comes to premium offerings, from SoC to connectivity (like mmWave).

Looking into 2022, our initial thoughts on technology trends point to the migrations of more 4nm/5nm designs by Qualcomm and MediaTek. Commenting on the research, Research Director Dale Gai said, “MediaTek’s next-generation flagship 5G SoC models (still under the Dimensity series) will become the company’s milestone in smartphone chipsets by entering the SAM (Service Available Market) with the end-device price tag of over $500. This merchant market has been dominated by Qualcomm’s flagship models based on leading-edge foundry technologies”.

Gai noted, “MediaTek will likely debut the new Dimensity series, including 5nm/6nm chipsets, in H2 2021, followed by new 4nm/5nm chipsets during H1 2022, and even 3nm tape-out in H2 2022. These new products will have some meaningful technological breakthroughs for MediaTek, targeting China’s premium market with the majority of wholesale prices in the $400-$700 band. Qualcomm is expected to stay at Samsung for 4nm on its new flagship models in 2022, though diversification would be the key moving forward. Apple appears to be the leader again, migrating to 3nm at TSMC in H2 2022. Compared to 2021, capacity constraints for AP/SoC in 2022 may not be the major concern since the effective capacities of 5nm from both TSMC and Samsung Foundry are expected to increase during this year.”

Smartphone SoC Migration Roadmap

Our foundry-to-smartphone AP/SoC research not only takes the bottom-up approach to analyze the near-term demand but also forecasts the long-term trend to see if a foundry could offer enough capacity in the leading nodes.

Commenting on the outlook for foundry nodes migration, Gai said, “We estimate that by 2025, 60% of total smartphone AP/SoCs will be fabricated in most advanced foundry nodes, including N5, N3 and even N2. Larger average die size, lower throughputs from increasing EUV layers, and higher yield rate uncertainties beyond 3nm are the likely drivers for more wafers in foundries processing the cutting-edge technology nodes for smartphone SoCs. The N5 node, which brings significant PPA (power, performance and area) enhancement from N7 and N10/12, will be a long node under the foundry roadmap for most Android-based 5G SoC migrations in the next two years. The total wafer consumption of N5 (including 4nm and 5nm) will account for roughly 25-30% of total built-in N5 capacity in the foundry industry during 2023-2024 (excluding Intel Foundry Services).”

Gai added, “Monitoring this outlook is crucial for the SoC vendors, smartphone OEMs and other upstream/downstream players to plan and align their mid- to long-term roadmaps with the forecasted available foundry capacity.”

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