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Thematic Research

Charter Equity Research publishes wireless industry thematic research and comprehensive forecasts of major trends in wireless that combine detailed studies with industry interviews and analyses to develop a working thesis on where the industry is headed and why.

Examples of our wireless industry thematic research include:



wireless industry thematic research iPhone 6S: Teardown analysis. (September 25, 2015)
Exerpt: Total RF content up ~25% y/y for iPhone 6S. The teardown photos published last night confirm our forecast of a higher overall RF content from an increase in the number of LTE bands, a move to MIMO in the Wi-Fi section and larger, more complex diversity receive modules. The final word on how much all of this is worth will have to wait until the quarterly reports but discussions throughout 2015 suggest total additional spending will be in the $4.00 range, bringing iPhone 6S to about $24 in total RF content.

wireless industry thematic research RF Semiconductors - The Ten Most Common Fallacies about the RF TAM (September 22, 2014)
Exerpt: #1: MMPAs- Multi band amplifiers will accelerate price erosion and destroy the market. The arrival of multi mode amplifiers (MMPA) in 2010 did drive down pricing, but only on a per-band basis, and then only in high-band count devices; they had no impact on ASPs for PAMs, PADs, FEMIDs or filters. Like Costco, lower per unit cost could only be obtained through bulk purchases, but single serving prices remained unchanged. MMPAs offered more for less, but they weren’t supported by most baseband vendors, so there wasn’t much of an impact in 2011. Today virtually all smartphones use MMPAs, yet ASPs have not plummeted because the number of bands has risen faster than pricing has declined5. In fact, after an initial drop, ASPs have started to rebound as the current crop of products must clear a higher performance hurdle and include many more bands.

wireless industry thematic research iPhone 6 – A Detailed Teardown Analysis. (September 19, 2014)
Exerpt: Apple’s philosophy of minimum SKUs pushes total RF content up again. Contrary to what we thought two years ago, rather than segment its phones by region to reduce BOM costs, Apple has taken the opposite path, and decreased the number of RF SKUs to two with iPhone 6. This has increased the number of bands, as well as the complexity and cost per phone. Even if the unthinkable occurs and unit volumes are flat y/y, total dollars spent on RF by Apple will increase about 30% on higher content alone.

wireless industry thematic research RF Semiconductors – A thorough look into the RF Content of the iPhone 6. (August 11, 2014)

wireless industry thematic research BAW and Order - Avago and Triquint: The Clean Up Crew of LTE (September 9, 2013)
Excerpt: The addition of LTE to an already crowded radio spectrum is rapidly increasing demand for high performance filters, that only Avago and Triquint are capable of supplying in volume. This exclusivity stems from the fact that the need for BAW was unforeseen in the early days of cellular. The fabrication process was so difficult that few firms had both the foresight and the resources to pursue it. Several component suppliers did try their hand in the early and mid 2000s, but abandoned efforts after experience exposed the true challenges of BAW. It didn’t help that most of the filters used in mobile phones at that time were low-cost, commoditized parts that were widely available on the merchant market. The economics of handset filters undercut enthusiasm for long and expensive R&D efforts in esoteric technologies like BAW.

wireless industry thematic research BAW vs. SAW: A Detailed Look at Materials, Markets and Manufacturers (September 9, 2013)
Excerpt: Filters come in all shapes and sizes and are used in just about every electronic device from satellites to circular saws. Most use standard electronic components, but for difficult applications, exotic materials like crystals, are often employed. There are several types of crystal filters, but those most commonly found in mobile phones are called acoustic wave filters. They are unique in that they operate on pressure waves (sound), rather than electricity. They accomplish this by converting radio signals to sound waves, filtering those through a pressure sensitive crystal, and then converting them back to radio signals. Like an opera singer and a wine glass, sound energy that resonates with the crystal’s natural frequency is reinforced, while all other signals are rejected.

wireless industry thematic research Understanding Disparities in the Food Chain’s Guidance for iPhone 5S. (July 27, 2013)

wireless industry thematic research RF TAM Analysis: A Detailed Look at Spending on RF Components for Mobile Devices (May 21, 2012)

wireless industry thematic research Estimates for phone demand in 2011 are too low. (December 13, 2010)
  • Below average replacement rate in ’10 yields above average rate in ‘11.
  • Recession generated a large glut of delayed purchases
  • Strong demand and low inventories in 4Q10 suggest rebound is imminent.
  • Embedded/connected device sales will further increasing replacement rate
wireless industry thematic research Android's opportunity to jump ahead of iTunes (July 8, 2010)
Next generation music platform is the major battle in the smartphone wars over the next 12 months. Last week's announcement that Google is activating 160K Android devices per day (a run rate that exceeds 14M per quarter), demonstrates Android’s ability to attract new users when combined with focused carrier marketing. Clearing that hurdle, the next test will be “stickiness”; the platform’s ability to retain users through several generations of replacements, as well as entice them to purchase secondary devices such as tablets and set top boxes. Apple's iTunes sets the standard for a sticky application by providing seamless content management across products, which leads to an investment in time and money that makes switching costs prohibitively high. Their success is a roadmap for Android, which must achieve a comparable level of stickiness without copying the Apple model. To this end, Google should offer the functionality of iTunes in a cloud based model, easing the cost of switching to Android, while increasing user loyalty.

wireless industry thematic research Zeitgeist: A cautionary look at the world’s appetite for handsets. (June 19, 2010)
The recession is in check, worldwide sales of handsets are up, demand for mobile semiconductors is booming and OEM inventory in the April reports remained below normal; everything seems to be going great so why are we so worried? Our growing apprehension stems from a slew of data points that individually may not mean much but in aggregate seem to spell trouble. Indeed, the fact that almost every one of the top handset OEMs is cutting expectations for its own sales can be explained away as product transition missteps. The hand-waving argument being that it’s all just part of the old giving way to the new; and all that Nokia is losing in sales is being made up at Apple, RIM and the Asians with everything balancing out in the wash. The problem is the number and size of suppliers cutting forecasts far outweigh those holding firm or increasing; so in the big picture a bullish stance based on last quarter’s demand feels like whistling past the graveyard now.

wireless industry thematic research Zeitgeist: Arguing RF Semiconductors. (May 2, 2010)
Nokia’s implosion last week stoked investor’s concern that the handset food chain is headed for leaner times, particularly the semiconductor manufacturers which posted record results even as Nokia’s margins reach record lows. The idea that component suppliers can’t do better then their customers is rooted in years of experience with the boom-bust cycles of the PC semiconductor industry. The rollercoaster of scarcity and surplus that drives that cycle is a direct consequence of Moore’s law and the inertia inherent in multi-billion dollar fabs.

wireless industry thematic research Zeitgeist: Drifting from Reality in Phones. (January 31, 2010)
We were asked to comment on an article from Thursday's Financial Times that endeavored to explain motives behind the big moves in mobile phone stocks over the last week. While well written, we found almost nothing in the article we could agree with but found it be an excellent summary of popular misconceptions about smartphones in general and Nokia/Motorola in particular. We present the article and our analysis below.

wireless industry thematic research Zeitgeist: Barbarians at the Gate (March 7, 2009)
My first introduction to the concept of handsets as commodities occurred in 1999 in a rapid fire debate with the head of a large technology fund who ran through the logic of why it was inevitable that handsets would follow the path of PCs and see margins plunge to low single digits. He had good reason for concern given that year saw Qualcomm-Sony, Philips and Lucent exit the business, Ericsson fall into losses and Motorola struggle to remain profitable after losing its lead to Nokia. Clearly mobile phones seemed to be following the curve of other consumer electronics where fat profits on early volumes disappear as manufacturing scale expanded and competition intensified. Everyone knew what Moore’s law had done to PCs and with cell phone volumes already eclipsing computers there was little reason to expect things would be any different for mobile phones. It was a familiar story that seemed to make sense but it didn’t come to pass and by 2002 Motorola rebounded to almost 10% operating margins in phones while Nokia was collecting 20¢ in profit on every dollar in handsets at almost twice the volumes of ‘99. Moreover the resurgence in profits didn’t come at the expense of competition, which actually increased as Samsung and Siemens grew their shares and LG joined the fray.

wireless industry thematic research Zeitgeist: Dance partners are being chosen at the baseband ball. (February 14, 2009)
In the next several weeks, Freescale will announce the divestiture of its cellular business in what will be another major step in the ongoing consolidation of the baseband industry. The genesis of this divestiture goes back to Chicago 2000 when a small group of Motorola engineers began work on a credit card sized device that would become the RAZR. That phone’s success redefined the definition of style in handsets and set in motion events that would lead to the consolidation we are now witnessing.

wireless industry thematic research Deconstructing the Decline: Separating inventory burn from declining demand in 4Q08 reports. (January 20, 2009)
For the first time in history, the number of cell phones sold in the fourth quarter was lower than in the third period. Fourth quarter sales, which are typically up 20% sequentially, ended the year about 2% lower than in 3Q. Worse still was the timing. The freefall in late October hit manufacturers after the annual production ramp for the Christmas selling season had already begun, leading to bloated inventories even after production was cut-back in November. Excess inventory is now pushing down gross margins, with more of the same in ’09 as manufacturing output and utilization fall more than orders to allow vendors to sell off excess finished goods. The damage caused to revenue and margins by lower utilization will become increasingly severe as order cancellations move up the food chain. This was evident in the November preannouncements which had handset sell-through down 10% y/y in 4Q08 while sell-in at OEMs is off by 15% and component suppliers preannounced declines of almost 20%. How much of this decline is due to excess inventory versus slowing end-demand can be approximated by analyzing quarterly results.

wireless industry thematic research Finding a Stable Bottom. (October 12, 2008)
Now that the market has broken anchor from fundamentals and is in freefall, investors are wondering when we will see a stable bottom. Because failures in the financial sector and concerns about the economy are fueling the sell-off, it won’t be remedied by positive data points out of any of our companies in the short term. Indeed, the only thing that can stem the tide at this point is an end to the cascade of defaults and the collapse of confidence in the credit markets.

wireless industry thematic research Google, Inc. – Special Report: Google enabled phone. Devil is in the details but potential exists for big gains. (November 5, 2007)
Marketing splash aside, it is too early to tell how the Google enabled phone will differentiate itself or how popular it will become. If Google concentrates on delivering seamless local based services (LBS), it could see dramatic gains. Location information is inherently valuable to mobile users, but is difficult to deliver seamlessly given the variety of technologies involved and the requirements for a visual interface. Improving ease of use and lowering costs could hasten deployment of LBS which would increase phone replacement rates and carrier data revenue. Indeed, we’ve long maintained that cell phones are ideally suited for LBS given they possess both location and personal information and can therefore tailor general location data to the specific needs of the subscriber. Unlike general 3G data services, LBS can enhance mobility by addressing subscribers’ need to know “where” on both an absolute (“where am I in the world”), and relative (“where do I need to be”) basis.

wireless industry thematic research Multimedia Phones - Revisited: Review, Update and Outlook Since Our 2004 Report (October 6, 2006)
Two years ago we analyzed multimedia functions (pictures and music) in cell phones using their impact on handset mobility as a framework. We argued that pictures or music would be popular with subscribers only to the extent their utility in a mobile world outweighed their impact on the cost, size and power consumption of handsets. We concluded that imaging would not be popular with most subscribers because making handsets more appealing as cameras makes them less appealing as phones. Music, on the other hand, complements mobile phones because much of the utility of a standalone music player can be achieved with little impact to handsets, and music, like mobile voice service, can be used on the go.

wireless industry thematic research Multimedia Phones: A Quantitative Analysis of the Impact of Imaging and Music on Mobile Phones (September 10, 2004)
After years of anticipation, the age of multimedia cell phones seems finally upon us. Phones capable of more than just talk are populating the product lines of all major phone OEMs which now offer models that support data, music, imaging and video. Like PDA1 phones before them, multimedia handsets represent the state-of-the-art in radio and semiconductor engineering, boasting more performance and features than any other handheld device. But while technology has made such products possible, it has not always made them profitable. Demand for feature rich smart phones usually falls well below that for entry-level models to the point where several handset OEMs have narrowed their offering of high-end phones to concentrate on main-stream products. That may change with the advent of digital imaging and music. The early success of camera phones suggests low-resolution imaging resonates with cell phone users. Rapidly increasing demand for these products reignites the debate over the viability of an all-in-one device centered on the mobile phone. Enthusiasts project a mobile phone invasion of everything from digital cameras to video recorders and televisions. Perhaps so, but given the checkered history of gadget laden handsets, it is important to understand that just because it can be done, does not mean that it should.


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