Charter Equity Research publishes wireless industry thematic research and comprehensive forecasts of major trends in wireless. These pieces combine detailed studies with industry interviews and analyses to develop a working thesis on where the industry is headed and why.
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Previews of our wireless industry thematic research:
Qualcomm vs. Broadcom: Checkers or Chess? (February 13, 2018)
Zeitgeist: Arguing RF Semiconductors. (May 2, 2010)
Excerpt: With last week’s unanimous rejection of Broadcom's second offer, Qualcomm’s future will now be determined by the
board election on March 6.
Points of interest on RF. (January 16, 2018)
Excerpt: The 5G filter story is being muddled.
Likely scenarios for Broadcom’s acquisition of Qualcomm. (November 5, 2017)
Excerpt: We don’t believe an acquisition of Qualcomm would herald a sea-change in Broadcom’s business model although it will upend the cellular modem industry.
What to expect on the quarter and in guidance for 4Q17. (October 26, 2017)
Excerpt: With so many moving parts in the mobile phone business and such large exposures to the big three OEMs (Apple, Samsung, Huawei), it’s often difficult to forecast hits and misses for Skyworks and Qorvo in individual quarters.
Big changes afoot in RF semiconductors. (September 15, 2017)
Excerpt: Carrier’s quest for the 1Gbps phone is proving a boon to RF semiconductors. We just completed a series of technical discussions with leading companies and engineers in semiconductors and handsets, and have concluded the quest for a 1Gbps phone will be a boon for the leading RF semiconductor companies.
iPhone 8: What to expect for new bands. (September 11, 2017)
Excerpt: We’ve been asked to comment on a recent note
postulating on the possibility of various bands showing up in Apple’s new phone. Having tracked RF filter development for many years, we are familiar with the history, progress and likelihood of deployment of all the bands mentioned in the note.
RF Semiconductors – What to expect for the RF stocks with Apple’s upcoming phone release. (July 7, 2017)
Excerpt: We’ve fielded several questions about variations in RF content by SKU, with most investors expecting three new models in September: upgrades to iPhone 7 and iPhone 7S, and a new high-end flagship, iPhone 8. We expect RF content gains in all models.
RF Semiconductors – Trends for 2017. (January 18, 2017)
Excerpt: We are highly confident that content will increase in 2017 at all the major handset groups: Apple, Samsung, China Inc. (top 10 Chinese OEMs), and China white-box (MediaTek, QRD, Spreadtrum). The largest percentage increase will almost certainly be in China white-box phones where MediaTek is accelerating its move to PADs.
RF Semiconductors – Even if iPhone’s release schedule is stretched (unlikely) it will have no bearing on RF. (June 4, 2016)
Excerpt: How can Apple stretch its phone release schedule to three years when it doubled the models and halved its time-to-market for iPhone in 2016? A news report out of Asia suggests Apple will extend the revamp schedule for iPhone from two to three years because of slowing demand. While this is certainly possible, we don’t believe it’s likely…
iPhone 6S: Teardown analysis. (September 25, 2015)
Excerpt: 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.
RF Semiconductors - The Ten Most Common Fallacies about the RF TAM. (September 22, 2014)
Excerpt: #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…
iPhone 6 – A Detailed Teardown Analysis. (September 19, 2014)
Excerpt: 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.
RF Semiconductors – A thorough look into the RF Content of the iPhone 6. (August 11, 2014)
Excerpt: We believe that the iPhone 6 will have about $17 in RF content and that Avago will be the big winner. Our analysis suggests $16 - $18 in RF content for Apple’s new phone, lower than our previous forecast of $18 - $19, because we no longer expect envelope tracking (ET) to be used in the new phone due to the problems experienced with Qualcomm’s ET device (QFE11xx).
A Field Guide to Filters (September 9, 2013)
Description: A meticulous 61-page primer explaining filter fundamentals (cost, insertion loss, temperature drift, distortion, and more), summarizing duplex filter products (front end modules, power amplifier duplexers, antenna filter modules), and comparing BAW vs SAW technologies.
Understanding Disparities in the Food Chain’s Guidance for iPhone 5S. (July 27, 2013)
Excerpt: The stark differences in September 2013 period guidance between many of the vendors supplying parts to iPhone 5S has heightened concerns over share loss, slow demand and delays in the release of Apple’s next phone. Of particular concern is the huge difference between Triquint’s blow-out guidance and Qualcomm’s short-fall.
RF TAM Analysis: A Detailed Look at Spending on RF Components for Mobile Devices (May 21, 2012)
Description: An in-depth 29-page report with detailed discussions of unit growth versus content compression, 2G to 3G conversion, High Density Amplifiers, and accelerating price erosion in commoditized devices.
Estimates for phone demand in 2011 are too low. (December 13, 2010)
Excerpt: Phone growth could well exceed 20% y/y in 2011. Despite what appears to be a robust recovery in handsets, sell-in remains insufficient to satisfy the pent-up demand induced by three years of economic weakness. At 15%, the replacement rate for mobile phones hit a ten year low in 2009 after averaging 22% for the previous eight years.
Android's opportunity to jump ahead of iTunes (July 8, 2010)
Excerpt: 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.
Zeitgeist: A cautionary look at the world’s appetite for handsets. (June 19, 2010)
Excerpt: 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.
Excerpt: 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 than 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.
Zeitgeist: Drifting from Reality in Phones. (January 31, 2010)
Excerpt: 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.
Zeitgeist: Barbarians at the Gate (March 7, 2009)
Excerpt: 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.
Zeitgeist: Dance partners are being chosen at the baseband ball. (February 14, 2009)
Excerpt: 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.
The Bigger Picture: The Whiplash Effect of Excess Inventory (January 31, 2009)
Excerpt: On October 12, 2008, we described a scenario in which a crescendo of bad news and preannouncements through the December period would culminate in a market bottom around February 1, 2009 (“Finding a Stable Bottom”). Our thesis has generally proven to be true even if the pace of events has been faster than we have anticipated.
Deconstructing the Decline: Separating inventory burn from declining demand in 4Q08 reports. (January 20, 2009)
Excerpt: 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.
Finding a Stable Bottom. (October 12, 2008)
Excerpt: 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.
Smartphone Wars: Google’s clone enters the fray. (September 27, 2008)
Excerpt: So begins the Android media juggernaut, Google’s formal entry into the Smartphone Wars, which have become the industry’s black hole consuming all media and emanating little reasoned critique. And while the Google faithful come off as deists compared to the Apple jihad, we believe expectations for the proliferation and impact of Android are optimistic. There are several major pitfalls that are routinely overlooked or discounted by new entrants in cell phones, especially those lacking experience in industrial grade communications systems and radio networks. That said, we believe the open architecture and flexibility of Google’s approach give it advantages that will help Android struggle through the rough road ahead.
Google, Inc. – Special Report: Google enabled phone. Devil is in the details but potential exists for big gains. (November 5, 2007)
Excerpt: 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.
Multimedia Phones - Revisited: Review, Update and Outlook Since Our 2004 Report (October 6, 2006)
Excerpt: 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.
Multimedia Phones: A Quantitative Analysis of the Impact of Imaging and Music on Mobile Phones (September 10, 2004)
Excerpt: 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.