5g will promote network upgrading and create a new technological order. 2G and 3G networks, which have coexisted for nearly 20 years, will be phased out. 4G and 5g will become the mainstream technology in the next decade.
this technological change has brought both challenges and opportunities. It is very important for operators, equipment manufacturers, component manufacturers and software manufacturers to achieve a smooth transition. Baseband manufacturers have unique advantages, which can quickly expand business from mobile phones to more extensive cellular connected devices.
as we all know, the manufacturers who first occupy more market share have more “discourse power”. So, what is the situation in the global 5g baseband market now? Who holds the “discourse power”?
recently, counterpoint, a market research organization, published a report in detail on the upgrading trend of smart phones by mobile phone baseband / chip manufacturers to meet the reshaping of 5g terminal track.
we know that the technology transition will take an average of 10 years, and 5g will be the protagonist in the next 10 years. In the next five years, the number of 5g connections is expected to grow much faster than when LTE was launched, but it is impossible to replace 4G all at once. Therefore, 4G and 5g technologies will continue to coexist for a long time to come.
in the next five years, 4G will play an important role, especially in emerging markets. 4G smartphones from emerging markets are now in the $50 segment. In addition, 4G penetration rate in many markets is still below 50%, so 4G still has great market growth space. From a regional perspective, 4G will dominate in India, the Middle East / Africa, Latin America and the rest of the Asia Pacific region, as shown in Figure 1.
at present, there are about 2 billion active mobile phone users in the world, and the annual sales volume exceeds 350 million. Most feature phones are straight or flip top design with less than 4 “color or monochrome display, T9 keyboard, and basic 2G connection with voice, SMS and GPRS / edge functions.
we know that the main consumers of functional mobile phones are the bottom users of the social pyramid, and they need more affordable mobile phones. Nowadays, more and more functional mobile phones begin to support advanced 4G network, and improve the performance, specification and screen size, which will meet their needs more.
considering the availability and macroeconomic factors, it is the main reason that a large number of people use functional mobile phones. Age, power supply, income level and literacy are several of the determinants. Counterpoint research evaluated and scored major markets based on 13 indicators to assess the market potential of feature phones. The 20 countries listed in the table below account for about 90% of the market share of functional phones in the next three years. Most of them are developing countries, including some countries in Africa, Asia and Latin America.
the African market, especially Kenya, Ethiopia and Tanzania, is the largest potential market for basic and enhanced 4G function mobile phones. In terms of overall market size, India, Bangladesh, Nigeria, Pakistan and South Africa remain the main markets.
at present, more than 20 operators in the world have shut down 2G networks, and many operators are shutting down or planning to shut down 3G networks. The 4G function mobile phone provides such a choice: supporting 4G network, providing enhanced functions based on customized operating system, which can meet the diversified needs of users at low cost.
the report points out that the shipment of 4G function mobile phones in various regions is growing. The Jiao phone launched by reliance in India is a good example. In the future, 4G function mobile phones will bring considerable sales and revenue to ecosystem manufacturers. By 2024, India will be the world’s largest mobile phone market, followed by Bangladesh and Nigeria. The revival of Nokia’s functional phones, the steady growth of brands such as itel and Tecno in Africa, and the hot sales of more powerful functional phones such as jio phone in India have provided continuous impetus for the functional phone market.
the main supporter of the functional mobile phone is Ziguang zhanrui. In 2019, Ziguang zhanrui released the Huben t117 solution for 4G mobile phones in India, which achieved the balance between cost, performance and power consumption. It is an ideal 4G function mobile phone platform, so it is in the market leading position, accounting for 60% of the market share. Based on the booming trend, counterpoint expects to sell more than 200 million 4G phones in 2024.
from increasing revenue to saving cost, developing 4G function mobile phone business can bring significant commercial value to operators. Operators can focus on the following four key areas, which will bring operators a total of $7 billion in business revenue in three years.
speed up the deployment of advanced cellular networks: 4G function mobile phones can also help operators complete user migration and have the opportunity to accelerate the deployment of more efficient cellular technology.
release valuable spectrum resources: the migration of 2G users to a more efficient 4G network can release valuable 2G spectrum for operators and deploy it with 4G and the upcoming 5g network.
the rapid deployment of 5g network in the world has provided guarantee for the recovery of global smart phone market. In 2020, the global 5g network and equipment are accelerating the popularization, especially in China. The white hot market competition will push down the price of 5g smart phones, which will contribute to the outbreak of 5g smart phone market.
counterpoint estimates that in 2024, the 5g smartphone shipment is expected to reach 1.16 billion, with a five-year compound annual growth rate of 137%, accounting for 70% of the total mobile phone shipment.
according to the latest data from the Ministry of industry and information technology, as of the end of June, more than 400000 5g base stations have been constructed and opened in China, 197 types of 5g terminals have been granted network access permission, and the shipment volume of 5g mobile phones this year has reached 86.23 million. In the second quarter of this year alone, 33% of smartphones sold in China supported 5g, leading the world.
among them, Qualcomm has an end-to-end product portfolio from SOC, baseband modem to transceiver, RF front-end, and antenna, and supports the frequency band below 6GHz and mmwave at the same time. Whether in terms of platform features or the number of commercial models, Qualcomm leads its competitors, occupying more than half of the 5g market share.
as a follower, MediaTek is also actively laying out 5g and constantly expanding its 5g Tianji series product line. At present, MediaTek has launched 5g chips such as Tianji 1000 / 1000plus, Tianji 800 / 820 and Tianji 720.
in addition, following the release of its first 2G / 3G / 4G / 5G multimode baseband chip chunteng v510 in 2019, Ziguang zhanrui also launched a 5g SoC platform Huben t7520 with 6nm EUV process in February 2020, which adopts the more advanced 6nm Compared with the current mainstream 7Nm process, the density of transistors is increased by 18% and the power consumption is reduced by 8%. Huben t7520 will bring excellent performance and lower power consumption. With 5g super uplink technology, the uplink speed is increased by up to 60%, and the downlink peak speed is increased to more than 3.25gbps. These features make Huben t7520 as the mainstream 5g smartphone platform very competitive.
with the launch of 5g solutions for the midrange market by Qualcomm, MediaTek and Ziguang zhanrui, the average price of 5g smartphones will decline rapidly. Globally, apple, Samsung and Huawei will occupy the top three in the 5g smartphone market. The 5g brands of ZTE, realme, Xiaomi, Alcatel and operators will participate in the market competition by carrying 5g solutions with high cost performance from MediaTek and Ziguang zhanrui, and promote 5g to penetrate into the low and medium price segments.
during the transition to 5g, the cost share of SoC Platform in the whole smartphone bill of materials will continue to increase in the short term, and it is expected that this proportion will exceed 25% in 2020. In addition, the adoption of new technology and the improvement of AI computing power will further increase the cost of SOC. However, with the rapid popularization of 5g to the mid tier market, the price of SOC will gradually decline in the next few years, but it will still account for the largest proportion of the total cost of mobile phones. The transition from basic 2G function mobile phone to 3G / 4G function mobile phone is the same.
as the SOC of Samsung and Huawei is mainly used for their own products, most mobile phone manufacturers will compete in 5g smart phone and 4G function mobile phone market by relying on affordable solutions from Qualcomm, Ziguang zhanrui and MediaTek.
as the market competition intensifies, SOC manufacturers are competing to launch end-to-end solutions, including application processors, GPUs, baseband and and complete RF front-end systems. With the development of cellular technology, it is necessary to support more frequency bands, enhanced carrier aggregation technology, and more antennas. The continuous evolution of design and the adoption of metal fuselage further enhance the complexity of product design and increase the cost.
in most cases, integrated solutions lead to better design efficiency and cost-effectiveness. Qualcomm, MediaTek, Samsung and Ziguang zhanrui can provide end-to-end solutions for 2G / 3G / 4G mobile phones. At the present stage, Qualcomm is in a leading position in the integration of 5g solutions and the supply capacity of 5g key components, while MediaTek, Ziguang zhanrui, Samsung and Hisilicon are also constantly improving their platform capabilities. At the same time, in order to cope with the increasingly complex RF requirements, relevant ecological participants are cooperating with SOC manufacturers to develop high integration end-to-end solutions. Cooperation among manufacturers is crucial for the smooth transition of 5g.
in 5g era, connectivity will be everywhere, and computing demand will increase significantly. According to counterpoint’s prediction, the market value of global baseband market will reach 38.7 billion US dollars in 2024. With smart phones as the important pillar, the cellular Internet of things, smart watches and other devices jointly shape the future of the cellular baseband industry.
first of all, in terms of smart phones, the baseband market of smart phones will reach US $29.4 billion in 2024, accounting for more than 76% of the revenue of the whole cellular baseband market. Previously, affected by the new crown epidemic, the number of smart phones will continue to decline in 2020, but 5g will become a catalyst for subsequent market rebound, and boost the global smartphone market in 2021. By increasing the average price of chips, it will help the revenue growth of smart phone baseband market.
as one of the fastest growing markets, the cellular Internet of things covers all kinds of devices supporting 5g / 4G / 3G / 2G. It is expected to account for 12% of global cellular baseband market revenue. In 2024, the sales volume of devices connected to lpwa mobile network will exceed 274.5 million. The market size is 4.7 billion US dollars, which provides a golden opportunity for baseband manufacturers to expand their business beyond mobile phones.
at present, the smart watch market is developing rapidly. The cellular technology enables the products to get rid of the shackles of smart phones and operate independently. It is estimated that nearly half of the smart watches shipped in 2024 will have built-in cellular functions, and the market demand for dedicated baseband chips will surge. It is estimated that the market will generate $1.2 billion in 2024.
in terms of tablet computers, although the whole market is stagnant, we can see that the market has witnessed significant growth through the statistics of mobile tablet data that are always connected. In 2024, the shipment volume of the tablet market will exceed 45 million, creating 590 million US dollars of revenue for global baseband manufacturers.
together with functional mobile phones, extended reality and CPE customer front-end devices, their contribution to the global baseband market in 2024 will jointly support a “big cake” with a market value of US $38.7 billion.
a new round of global network technology upgrading will bring huge business opportunities for the whole ecology. baseband