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3G phones shave costs, but integration path unclear

Posted: 14 Oct 2004 ?? ?Print Version ?Bookmark and Share

Keywords:3g cellphones? digital chip? gsm? w-cdma radios?

The latest crop of 3G cellphones shows the market is maturing with more integrated digital chipsets driving substantially lower handset costs. However, designers are taking diverging paths in silicon integration, according to a new report from Portelligent Inc.

"On balance, we have gone from downright pessimism concerning the business prospects of UMTS, to a guarded optimism," said Howard Curtis, vice president of the company that analyzes portable systems. The report focused on handsets for the UMTS standard that integrates 2G GSM and 3G W-CDMA radios.

A teardown of 11 UMTS phones released in the last 18 months showed handsets released since the start of 2004 have on average 25 percent fewer components than first-generation UMTS phones that shipped in 2003. Portelligent estimates manufacturers cost of goods dropped an average $70 from $234 for the 2003 models to $164 for this year's crop.

"Given our assumptions, the actual cost reductions may be even greater than our analysis suggests," said David Carey, president of Portelligent. That's because the company assumes high-volume shipments and does not include R&D and general business costs in its estimates.

"What's driving the costs are the additional radio, more complex ASICs, higher memory content for video and pictures and larger high-res color LCDs," said Carey.

All the handsets in the study used TFT color LCDs that typically ranged from 1.8- to 2.2-inch diagonal in size and 176 x 220 or QVGA in resolution. Total memory size ranged from as much as 100 Mbytes for phones for Japan's feature-rich FOMA service to 50MB. Average memory sizes dropped somewhat in 2004 phones as more memory was integrated into chip sets and the second-generation 3G handsets slimmed down.

"Some first-generation UMTS phones were more like PDAs, focusing more on features than form factor," said Curtis.

Digital silicon integration was the primary trend driving the lower parts counts and costs. For example, the first-generation NEC e-606 phone sported 108 ICs, the most complex cellphone Portelligent has encountered thus far.

The NEC phone used multiple ASICs to process both the GSM and W-CDMA protocols. NEC teamed up with Agere Systems to deliver a 2004 handset with a single digital baseband for GSM and W-CDMA. Other handset makers found other chip partners to take them down a similar path, although some still use separate applications and communications processors.

Carey said he expects to see continued use of multichip packages to reduce the footprint of NOR, NAND and SDRAM memories used in handsets. However, it's not clear what the next steps are in silicon integration.

"We are seeing what may be a divergence of design philosophies," said Carey.

With its 2004 design, Nokia stepped back from a first-generation integrated DSP and applications processor that handled/apps processor for GSM and W-CDMA.

"It's not exactly clear why that happened. It may have been to get away from ASIC complexity that got out of hand. Whether the chip designs recollapse remains to be seen," said Carey.

Chip counts for phones used on Japan's FOMA service grew by as much as 60 percent from 2001 to 2002 phones to 2004 models, although overall silicon die area shrank by 15 percent. The growing chip count may be due to the "barnacle effect" of new features getting added on to the air interface. Each new feature can require both a new chip and a power management device.

Integration is on the horizon for RF components. Most of the handsets in the study used separate GSM and W-CDMA radio paths with separate W-CMDA transmit and receive chips. However, Infineon is now providing a single-chip W-CDMA transceiver. Qualcomm is providing an integrated GSM and W-CDMA transmitter with a separate W-CDMA receiver and small external amplifier.

The RF integration in next-generation handsets "will have some cost impact, but it will not be that dramatic," said Carey.

The study also noted that major handset makers are starting to ally with one of five chip set makers for their handset silicon. The handset/chip partnerships include NEC/Agere, LG/Ericsson Mobile Platforms, Motorola/Freescale, Nokia/TI and Samsung/Qualcomm.

- Rick Merritt

EE Times

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