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Capital spending seen to rise for 4G/LTE tech

Posted: 02 Feb 2012 ?? ?Print Version ?Bookmark and Share

Keywords:4G/LTE? wireless technology? capital spending?

According to IHS Inc., the move toward adopting the 4G/LTE standard by mobile carriers will drive global capital spending on the wireless technology to almost $24.3 billion next year. This is a far cry from the $8.7 billion that is predicted to be spent on the 4G/LTE this year.

LTE infrastructure spending in 2015 will climb to $36.1 billion, compared to just $9 billion for 3.5G, added the market research firm. The growth is expected to allow LTE to overtake 3.5G, which will end its five-year run this year as the dominant category in wireless infrastructure gear spending. Next year, 3.5G infrastructure technology will generate $19.8 billion in revenue.

4G/LTE capital spending

Global capital expenditures by wireless carriers for 4G LTE infrastructure gear (Source: IHS)

"This trend started in the second half of 2009 when some wireless operators in Europe, North America, Japan and South Korea started to deploy LTE technology," stated Jagdish Rebello, director and principal analyst at IHS. "The number of mobile network operators that are trialing, deploying or commercially operating 4G/LTE networks now has grown to about 200 worldwide, up from 160 in 2010. And such widespread support will drive carrier spending on LTE to surpass 3.5G by next year."

For infrastructure manufacturers and semiconductor suppliers, LTE represents a strong revenue growth potential and an opportunity to develop long-term relationships with carriers. To this end, manufacturers are developing hardware solutions labeled as 'Any G to LTE' that support easy software upgrades to LTE, while maintaining backward compatibility with the legacy 2.5G and 2.75G wireless technologies.

Supporting peak data rates that are significantly faster than the maximum speeds of 3.5G/3.7G technologies, LTE represents an all-Internet Protocol networking technology. LTE also offers advantages such as reduced latency, flexible bandwidth provisioning and lower cost-per-data-bit transmitted, noted IHS.

Silicon suppliers also must be ready to meet the challenges and demands that LTE solutions place on semiconductors and hardware architectures, with suppliers able to deliver price-competitive solutions. In particular, 4G networks of the future must evolve to more heterogeneous architectures such as metro cells that will be used to augment coverage or fill holes in areas of high data traffic. These metro cellsalso known as small cellswill be used alongside WiFi hotspots to provide coverage in public spaces, IHS added.

At present, semiconductor suppliers are trying to address the challenge of metro cells with solutions that reflect their heritage. For instance, Texas Instruments and Freescale Semiconductor are targeting the metro cell market with DSP solutions. Meanwhile, companies such as PicoChip and Broadcom are trying to address the same issue with scaled-up versions of their SoC solutions for femto base stations.

To be sure, such solutions will require tremendous flexibility in networking equipment, and the solutions likely will have to be tailored to the needs of the individual operators. And even for a given operator, such needs will vary by location.

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