The market for radio frequency (RF) components in wireless handsets is poised to make a substantial leap in revenue as mobile operators and cellphone manufacturers alike increasingly push 4G Long Term Evolution (LTE) technology, according to an IHS iSuppli Wireless Communications topical report from information and analytics provider IHS.
Revenue for RF components comprising power amplifiers, duplexers and switches is projected to reach $5.6 billion by 2016, up a notable 60 percent from $3.5 billion in 2010. This year, the RF component space will bring in $4.7 billion, compared to $4.2 billion last year. Each year during the forecast from 2010 to 2016 will witness market growth ranging from 4 to 12 percent.
The onset of 4G LTE will be a driving force in the market for RF components, the materials and building blocks used to build circuitry for catching wireless radio signals. In handsets, the RF front end has seen trends in integration over the past few years, and the rise of smartphones as well as LTE will provide welcome opportunities for RF component manufacturers to satisfy an ever-growing appetite among consumers for faster access to mobile data.
In essence, handset manufacturers moving from simply supporting 2G/3G to also backing 4G on top of the older technologies will need to determine whether to integrate the RF components supporting an increasing number of frequency bands and an expanded set of operational modes. The decision is a complex one, because integration can take place at different levels within a single product category, such as switches. However, as handset manufacturers decide to integrate, RF component suppliers must offer the right balance of performance, cost and flexibility to support the corresponding solution.
For some RF products, the move to integrate is reducing the total number of components per handset, and average selling prices are also eroding-both naturally and as a result of integration in the RF front end. Nonetheless, overall growth in RF component shipments will more than offset the negative effects of contraction elsewhere. Given the maturity of each generation, a higher level of mode and band integration is expected to take place with 2G/3G components rather than the relatively new 4G components.
Of the major RF component types in the front end, power amplifiers including transmit modules and power amplifier duplexer (PAD) modules will generate the most revenue. Between 2010 and 2016, power amplifier content per handset will be supported by a ramp in LTE and the increased prevalence of mixed-mode 3G handsets.
Switches will also enjoy dramatic growth during the period. While power amplifiers integrate to provide multimode and multiband support to the growing number of 3G/4G handsets, switches will go the other way. As overall throw counts increase, experimentation with switch architectures will come about in higher end handsets, serving to potentially raise the switch component count per handset.
A third RF component, duplexers, will likewise make solid gains from the downward trend of 2G handsets, projected to just take 20 percent market share of the total handset space by 2016, compared to 60 percent in 2010. The drop in 2G handsets, coupled with the growth of 3G/4G CDMA and OFDMA devices, will require manufacturers to adopt duplexers for handset transmit and receive functions. Not all manufacturers, however, will pursue a uniquely discrete or standalone approach for duplexers-as in the iPhone 5 from Apple Inc., which uses a combination of a standalone duplexer along with multiple PADs.
With handsets moving further into an RF environment requiring support of multiple technologies and numerous frequency bands, handset manufacturers will have to decide if they wish to use discrete components-or pursue an integrated approach. The speed at which the LTE spectrum is standardized will also play an important role, as RF component manufacturers cannot effectively create integrated products until the current spectrum of possibilities are reduced.
How phone manufacturers choose their RF integration approach will help some component suppliers and hurt others. Even so, their actions won't slow down the overall market for RF components, with prospects for the space set to grow considerably in the next few years.