3G and CMOS migration set agenda for Chinese handsets

China is where it s now at for cell-phone manufacturers. Leading vendor Nokia, of Finland, said in its most recent earnings call that it had witnessed an increase in shipment volume of about 87% compared with the equivalent period in 2004.

But while the top global brands have enjoyed recent success in penetrating the world s single biggest handset market (350 million subscribers and 100 million cell phones bought annually), it is typically the local cell-phone makers that have dominated sales in China.

Visit a cell-phone store in Beijing and you will most probably see five Chinese-branded phones for every Nokia handset. The leading local brand name is Ningbo Bird, which became one of the top 10 global handset vendors for the first time in 2004. The Chinese company was ranked in eighth place by analyst firm IC Insights in its review of the market, ahead of the Japanese heavyweight electronics firms Panasonic and NEC.

Bird, as the brand is known, is also keen to penetrate outside of its local market, and the company claims to have exported 3 million handsets in 2004, equating to one-fifth of its total shipments of 15 million.

Bird s local rivals include Amoi Electronics, TCL Corporation and Lenovo Mobile. The latter is a subsidiary of China s leading PC maker, which is best known in the West for acquiring IBM s PC business in late 2004.

Cedric Paillard and colleagues at the research firm Semiconductor Insights recently performed a tear-down analysis on seven of China s top-selling, locally made cell phones to establish any differences in construction and supply lines between the domestic industry and that of the rest of the world.

Paillard looked at five phones from Ningbo Bird, and one each from TCL and Amoi. "Bird is the biggest domestic brand, and also produces one of the most advanced phones in terms of the [chips] inside," he said.

According to him, the power amplifier (PA) and antenna switch are largely provided by GaAs chip manufacturers. PAs from RF Micro Devices (RFMD) featured in one of Ningbo Bird s top phones, the A150, and Skyworks Solutions PAs showed up in two of the seven handsets analyzed (see table).

But owing to the nature of price competition in China many older chip solutions are still being used, with power management units from Agere and Philips also found in some of Bird s most popular phones.

"Rather than trying to redesign something for the Chinese market, many manufacturers will put a lot of [other] devices around a standard PA to make it match," said Paillard. "Despite the large size of the Chinese market, it s still not really big enough to justify the development of a specific PA solution."

China s migration to 3G services is of enormous strategic importance to RF chip manufacturers, and one that is complicated by the Chinese authorities backing of the home-grown network standard TD-SCDMA. While the development of handsets based on TD-SCDMA is thought to be lagging behind that of the network architecture, this could change following an agreement between Nokia and local service provider China Putian to collaborate on the rollout of 3G networks based on both the Chinese standard and on the more conventional wideband CDMA protocol.

The two companies have formed a joint venture company that plans to sell network systems in China as early as 2006, and Nokia s unrivalled expertise in handsets will undoubtedly ensure that cell-phone technology soon matches that of the network.

According to Paillard, China may well end up falling into line with much of the rest of the world by adopting W-CDMA for cost reasons. He likens today s 3G network situation to that previously seen in the wireless LAN sector, where the Chinese government originally wanted to roll out its own system for reasons of security. That plan was eventually dropped because it was deemed to be uneconomic.

"I wouldn t be surprised if the same thing happened with TD-SCDMA," Paillard told Compound Semiconductor. "I m not saying that it [TD-SCDMA] won t happen, but you increase significantly your cost of development if you re not in line with other large markets."

"You can see that with the domestic Chinese phones we have analyzed. They tend to use as much as possible from what is available in other markets. No company has designed a specific chip for the Chinese market." Paillard added that semiconductor chip manufacturers might well band together to lobby for 3G harmonization, as happened with WLAN.

While GaAs companies are likely to benefit as Chinese consumers migrate to higher-end phones that utilize the greater linearity of the compound material, one recent design win may hint at a future shift in the market dynamics towards CMOS.

That came in late September, when fabless chip designer Silicon Laboratories announced that both its transceiver and its CMOS-based PA would feature in a line of handsets made by Lenovo Mobile. Silicon Laboratories says that its Si4300, which is manufactured at the huge TSMC foundry in Taiwan using a standard 0.35 μm process, is the first GSM PA solution to be implemented in CMOS.

Lenovo may not yet be a major player in the handset market, but, as Paillard pointed out, any supply deal with a Chinese manufacturer could be construed as significant, and now that Silicon Laboratories is designed into Lenovo s phones it is likely to stay there for some time.

Silicon Laboratories may have had to bargain hard for its position with Lenovo, but the development could be a sign of things to come - at least in the long term. "A significant amount of work is going into CMOS-based power amplifiers," said Paillard. "I think that GaAs chipmakers have a bigger problem than just worrying about TD-SCDMA - they should be worried about their transition plan to CMOS in general."

Paillard believes that many of the major semiconductor companies with their sights set on the RF market are looking at 2010 as the likely time for a shift towards the use of CMOS in digital PAs, through 90 nm or 130 nm silicon processing techniques.

Some firms are targeting the RF sector more aggressively, believing that the switch could occur as soon as 2007, and one company is expected to produce a full CMOS PA for WLAN applications next year. "It is the power-amplifier-only guys that I am most worried about," warned Paillard, "because they do not necessarily have the strength on the baseband or transceiver side."

GaAs is certainly in the ascendancy when it comes to the design of PAs, and leading manufacturers such as RFMD are aggressively ramping the production of transceivers and full transmit modules. But ultimately the PA stage could become swallowed up in a single CMOS solution manufactured by a silicon giant such as Texas Instruments. "I think in 2010 you could see that," concluded Paillard.

• Semiconductor Insights report on Chinese handsets is available now. Visit www.semiconductor.com for details.