Digitimes applications processor 2018 230"Smartphone application processors (AP) worldwide will grow 1.5% to 1.67 billion units in 2018," DIgitimes estimates. Consensus is smartphone sales in 2018 will be about flat. Since accuracy for forecasts like this is +- several percent, don't make too much of the exact estimate. Some China Q1 sales are low enough to suggest a decrease in 2018. Digitimes has become a reliable source which I regularly check.

What's interesting here is the market shares. As smaller phone vendors fall out, the share of Samsung, Apple, and Huawei HiSilicon self-produced chips rises. They are usually the three biggest vendors and predominate in the more profitable high end chips. Company after company have failed in the wireless chip business.

The dominant companies make their own chips, leaving a limited (and shrinking) market for everyone else. The old Broadcom lost $billions before giving up. Qualcomm has thousands of excellent engineers and a $5B/year royalty stream. Spreadtrum is propped by Intel and virtually unlimited funds from the Chinese government via Tsinghua Unigroup.

Each of the companies has the resources to maintain enormous engineering teams while fighting for market share. The almost guaranteed result will be several more generations of inexpensive but powerful chips.

Royalties are becoming an ever-increasing burden. Qualcomm has raised royalties almost a third. Nokia and Ericsson are demanding more.

Huawei has just won a patent case against Samsung that will strengthen their claims worldwide.

 

Digitimes Research estimates total shipments of smartphone application processors (AP) worldwide will grow 1.5% on year to 1.67 billion units in 2018. The slowing growth in the smartphone market means global smartphone AP shipments will only grow at a mild pace in the next few years, reaching 1.77 billion units in 2021. The report shows that Qualcomm will continue reigning at No. 1 in terms of vendor rankings in 2018, followed by MediaTek. But in-house-developed chips by Apple, Samsung, and Huawei (Hisilicon) will see their share of shipments grow to almost 30% in 2018.

"Digitimes Research estimates total shipments of smartphone application processors (AP) worldwide will grow 1.5% on year to 1.67 billion units in 2018. The slowing growth in the smartphone market means global smartphone AP shipments will only grow at a mild pace in the next few years, reaching 1.77 billion units in 2021, according to Digitimes Research's latest Special Report - Global AP market, 2017-2021, which provides insight into various aspects of the market.

Qualcomm will continue reigning at No. 1 in terms of vendor rankings in 2018, followed by MediaTek. While the top-2 AP vendors are unlikely to see threats of being unseated, in-house-developed chips by Apple, Samsung, and Huawei (Hisilicon) will see their share of shipments grow to almost 30% in 2018. Except for Samsung who sells to outside clients a small quantity of its in-house-developed chips, Apple and Hisilicon produce processors exclusively for use in their own smartphones - the iPhone for the former, and Huawei's devices for the latter. As they are the world's top-three smartphone vendors (Apple, Samsung and Huawei), their growing presence is creating strong pressure for processor vendors. It is estimated Qualcomm will show a 1.5% decline in total 2018 shipments. MediaTek's customer base does not overlap much with the device vendors using their own chips and MediaTek has introduced competitive mainstream processors which have been adopted by downstream smartphone vendors. As such, MediaTek is expected to see a 2.1% increase in 2018 shipments but it may have difficulty reaching its 2018 goal of shipping 400 million chips due to slowing growth in the smartphone end market.

In terms of processor architectures, Cortex-A53 remains the mainstream, followed by in-house-developed architectures. As to manufacturing process technologies, 28nm node is still the dominate node, maintaining a major share. The manufacturing of processors for flagship phones will advance to 7nm, 10nm and 12nm nodes, resulting in a drop of the 16nm node's shipment share. The 14nm node's shipment share will rise marginally as Samsung expands its adoption of in-house-developed APs.

Smartphone AP developers are scrambling to add deep learning capabilities to their offerings so that they can perform edge computing in line with the rising artificial intelligence (AI) trend. Smartphone APs supporting heterogeneous computing with graphics processing units (GPU), digital signal processors (DSP) or neural network processors are growingly popular. It is estimated 26.9% of smartphone AP shipments worldwide will have deep learning inference and even training capabilities enabled by heterogeneous computing in 2018.

dave askOn Oct 1, Verizon will turn on the first $20B 5G mmWave network, soon offering a gigabit or close to 30M homes. The estimates you hear about 5G costs are wildly exaggerated. Verizon is building the most advanced wireless network while keeping capex at around 15%.

The Koreans, Chinese, and almost all Europeans are not doing mmWave in favor of mid-band "5G," with 4G-like performance. Massive MIMO in either 4G or "5G" can increase capacity 4X to 10X, including putting 2.3 GHz to 4.2 GHz to use. Cisco & others see traffic growth slowing to 30%/year or less. Verizon sees cost/bit dropping 40% per year. I infer overcapacity almost everywhere.  

The predicted massive small cell builds are a pipe dream for vendors for at least five years. Verizon expects to reach a quarter of the U.S. without adding additional small cells. 

In the works: Enrique Blanco and Telefonica's possible mmWave disruption of Germany; Believe it or don't: 5G is cheap because 65% of most cities can be covered by upgrading existing cells; Verizon is ripping out and replacing 200,000 pieces of gear expecting to save half. 

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 5G Why Verizon thinks differently and what to do about it is a new report I wrote for STL Partners and their clients.

STL Partners, a British consulting outfit I respect, commissioned me to ask why. That report is now out. If you're a client, download it here. If not, and corporate priced research is interesting to you, ask me to introduce you to one of the principals.

It was fascinating work because the answers aren't obvious. Lowell McAdam's company is spending $20B to cover 30M+ homes in the first stage. The progress in low & mid-band, both "4G" and "5G," has been remarkable. In most territories, millimeter wave will not be necessary to meet expected demand.

McAdam sees a little further. mmWave has 3-4X the capacity of low and mid-band. He sees an enormous marketing advantage: unlimited services, even less congestion, reputation as the best network. Verizon testing found mmWave rate/reach was twice what had been estimated. All prior cost estimates need revision.

My take: even if mmWave doesn't fit in your current budget, telcos should expand trials and training to be ready as things change. The new cost estimates may be low enough to change your mind.