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Ultralow-cost handsets call for single chip

Posted: 18 Dec 2006 ?? ?Print Version ?Bookmark and Share

Keywords:low-cost handset design? ultralow-cost cellphone design? use SoC for ultralow-cost handset? Mike Clendenin? EE Times?

Last year, the notion of an ultralow-cost handset for the masses was largely conceptual. There was talk of using single-chip designs to weed out cost, and slimmed-down software stacks to strip cellphones to the bare necessities of voice and maybe SMS, just enough to satisfy the basic needs and budgets of the next billion users.

Now it's starting to happen. In developing economies like Brazil, Russia, India and China, phones selling for less than $50 are popping up on store shelves. The goal is to hit $25 or less for materials; some more-aggressive predictions say $10 or less is possible.

The market for ultralow-cost handsets is expected to grow quickly over the next three to four years, as more than two-thirds of new subscribers come from developing countries. The GSM Association (GSMA) expects several hundred million ultralow-cost handsets to ship by 2010.

However, selling phones to the masses will get increasingly tougher. By 2010, as ultralow-cost handsets expand their share of the low end to 9 percent of units shipped, revenue will tail off quickly to $5.4 billion, or about 4.5 percent of the market. Naturally, chip prices will also drop, as handset prices decline!iSuppli pegged the average selling price of an ultralow-cost handset at $50 in 2005. As single-chip solutions replace discrete chipsets, that will drop to $32 by 2010.

"The people who are chasing that single-chip market are probably the ones who are going to be more involved in the bloodbath, and driving the prices down to the point where it is questionable whether they will make any money at it," said Doug Grant, director of business development for RF and wireless systems at Analog Devices Inc. (ADI).

Right silicon approach
There's disagreement over the right silicon approach for the market!an SoC including the RF vs. a system-in-package or even a tightly integrated module or discrete silicon. ADI's Mercury reference design is a multichip module. NXP also opted for a module approach in its Nexperia 5130, released late last year, but said it will ultimately move to a single-chip Edge solution.

Others are moving straight into SoCs. Infineon Technologies is already on its second-generation SoC, called the E-GOLDvoice (ULC2), which uses fewer than 50 other electronic components. The chip integrates power management and SRAM, and by using 130nm process technology, is able to pack it all into just 4cm2.

Silicon Labs developed baseband technology so that it could offer an SoC. Their Si4905 includes power management, uses TTPCom's AJAR protocol stack for ultralow-cost handsets and claims a footprint of 3cm2.

Texas Instruments Inc. will also be a strong contender, and is working with Nokia to get its LoCosto SoC, which uses separate power management. And even though the market for ultralow-cost handsets is considered GSM turf, CDMA leader Qualcomm Inc. is making strong moves with its single-chip QSC6010.

"You have to basically have a single-chip solution soon to be able to compete in this market. If you haven't shown some sort of RF capability that can be integrated with the baseband, like an RF CMOS transceiver, you're probably not going to get there in time," said Scott Smyser, an analyst with iSuppli who issued a report on the low-cost handset market earlier this year.

The GSMA's target is to give 80 percent of the world's population access to mobile communications by 2010, even if every person doesn't actually own a handset. To accomplish this, the role of network operators will be an important factor, although probably secondary to the "cash barrier" presented by the handset, said Ben Soppit, director of strategic initiatives for emerging markets at the GSMA.

Ultralow-cost units will take an increasing share.

While there are different methods to reach the goal of pairing ultralow-cost services to ultralow-cost handsets, the bigger barrier will always be the handset. Fortunately, progress is being made quickly. Already, handset prices in India are dropping fast. Motorola's C118, which won a tender for ultralow-cost handsets from the GSMA, is $45. And CDMA handsets from LG are also proving competitive. Telecom operator Reliance Infocomm offers one with a service package for $36, while another service provider, Tata, offers an "Ace" brand CDMA phone with service for $33.

"We have five OEMs working on platforms for the single-chip solution, so you can expect those early next year," said Terry Yen, senior director of marketing for Qualcomm CDMA Technologies.

Interestingly, people who fall into the demographic for low-cost platforms don't always head straight to the bargain bin. Despite being a little more expensive, Nokia phones are still quite popular in India and have picked up steam in China. This isn't surprising to people who have experience in developing markets, like Ian Drew, a VP of segment marketing for ARM Ltd. ARM introduced its smaller, more efficient Cortex-M3 processor to replace the ARM7 in low-cost phones. Drew spent several years working in or covering developing markets like China, Vietnam and India.

'Ultralow-cost plus one'
"People often save up for a few months to go and buy a phone, and they don't want the cheapest, no-brand one!they want to have something they can use and continue using," Drew said. "So there will be demand for the ultralow-cost handset, but I think there will be just as much!if not bigger!demand for the one above it."

Already, chipmakers are looking to add on features to their low-cost platforms, blurring the line between ultralow-cost and entry-level. "The more you penetrate emerging markets, the more the population will get aware of new features and want to have more than just the bare phone," said Renzo Pellandini, marketing director of the entry-level/mid-end phone segment at NXP, calling it "ultralow-cost plus one."

Initially, that "plus one" feature will likely be an FM or AM radio, but it will eventually migrate to MP3 playback or Bluetooth. Motorola has been working on more advanced mass-market handsets in anticipation of users demanding features, as they do in mainstream markets.

In China, where ultralow-cost handsets aren't as popular yet, local system designers are still interested in the single-chip and module solutions, said Cary Wong, manager of segment marketing at SST, which is finding a new market for its low-density 16Mbit to 32Mbit flash in the low-cost segment.

"They are using chipsets that were originally targeted at the ultralow-cost platform, and then they are packaging it along with other subsystems to create not just a simple ultralow-cost handset, but a low-cost feature phone," he said. It's called xiao ma twui da che or using a "small horse to pull a big cart."

It's no surprise that the next billion users will probably do what the last billion have: start with basics, and then crave more. The difference may be that they will want those extras, but will be unwilling or unable to pay substantially more for them. So even though ultralow-cost handsets are a new market, the challenge will be familiar to chip designers!do more for less.

- Mike Clendenin
EE Times

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