Mobile Phone Platform (Baseband) Industry Report, 2006-2007

In 2006, China's mobile phone output reached 455 million units, accounting for 43.75% of global total of 1.04 billion units. And baseband is the heart of semiconductor devices of mobile phone.

The developing trends of mobile phone baseband are as follows:

1. Integration level is about to be further improved. Currently, RF transceiver (small signal) has been integrated into the baseband, and in the future, RF front end is also expected to be integrated into the baseband, for which, Texas Instruments (TI), Infineon and Qualcomm are the uppermost drivers. TI depends on their unique DRP RF and the latter two depend on CMOS RF. CMOS RF is not as good as SiGe RF in performance but more powerful in cost, power consumption, size and flexibility, especially, mobile phone is more sensitive to the price, which drives CMOS RF to enjoy an increasingly growing utilization rate. However, performance and cost should keep balanced, there are also some limitations for CMOS RF application, so it is estimated that no more than 50% of medium- and high-grade mobile phones apply CMOS RF while 100% of low-grade mobile phones are likely to use CMOS RF.

2. Manufactures are trying to reduce R&D costs. Mobile phone price war results in that baseband manufacturers have to reduce costs constantly. One way is to combining already matured baseband products with RF and other modules together such as Infineon PMB7870, TI LOCOSTO and ECOSTO, and Qualcomm QSC series. Another way is to launch simplified version and remove unnecessary functions, such as MTK MT6626, MT6205 and MT6227.

3. Light and multimedia-oriented mobile phones, in particular, 3G and feature phones slather application processor. 3G phone requires heavy operation load, plus consumption of multimedia operations, therefore resulting in mobile phone design to have a long period and high cost. Besides, some multimedia is impossible to get integrated, such as video amplifier and video codec needed by TV phone. Feature phones are distinctive in music, camera, vidicon, TV and GPS, but highly-integrated multimedia phones are not flexible enough and have difficulties in responding swiftly to the changing markets, while application processor can manage these. Furthermore, in order to capture more markets, price of application processor is cut to be so low that costs of application processor plus simplified baseband are even lower than that of baseband integrated into many multimedia functions.

4. The baseband industry has been more concentrated. Taiwan-based manufacturers try to depend on TD-SCDMA to tap into this industry. Skyworks is the first to drop out of baseband industry. Skyworks earned USD 142 million from baseband business in 2004 and USD 123 million in 2005 but then such revenue decreased sharply to USD 50 million in 2006, which seemed to be caused by dived shipment of its partner TechFaith, but was actually because Lenovo that adopted the solutions of Skeworks went to MTK. As a result, Skyworks decided resolvedly to drop out of this field in order to avoid spending high cost to maintain such business. Silicon Labs comes to the second one. NXP purchased its mobile phone business at USD 285 million, mainly the AeroFONE single chip phone, Aero transceiver and amplifier. NXP is most interested in the RFCMOS that is of a great help for NXP to develop single chip phone in the future. And actually, Qualcomm can not launch QSC series until purchasing a company with RFCMOS technology.

It is uncertain when China can establish TD-SCDMA network nationwide, but the earliest date should be after 2008. As it has to take one year to test after the trial network get completed and another year to make network construction, TD-SCDMA phone is not brought into the market in a large scale until at least 2010.

Most of TD-SCDMA phone developers are looking on the progress of TD-SCDMA network in view of some existing uncertainties.

This report also makes an analysis of application of baseband of over 200 types of China's local mobile phones.