1. Communication upgrades increase band count and RF front-end value
Mobile communications have evolved from 1G to 5G. Since its emergence in the 1980s, mobile communication technology has developed over roughly four decades. Aside from refarming some bands for newer generations, new bands have been deployed for each upgrade, for example the n77, n78 and n79 bands used for 5G. As the number of supported bands increases, the RF front-end content per device also rises. According to Skyworks, the RF front-end value per handset increased from $3 for 2G to $25 for 5G.
In August 2022, the IMT-2030 (6G) promotion group began 6G technology trials. The period 2022–2024 is the key technical trial stage, 2025–2026 is the technology solution trial stage, and 2027–2030 is the system networking trial stage.
Global smartphones have shifted from a growth market to a replacement market, but communication technology upgrades continue. According to IDC data, global smartphone shipments grew rapidly from 2004 to 2015 while the share of 3G and 4G phones increased. After 2015 the smartphone market became largely a replacement market, yet technology upgrades continued and the share of 5G phones has been rising since sales began in 2019. In 2022 global smartphone shipments reached 1.206 billion units, and 5G phones accounted for 53%, surpassing 4G phones for the first time. IDC expects the 5G share to increase to 84% during 2023–2027.
2. Sub-6 GHz and 5G millimeter wave drive mobile RF front-end growth
According to Yole, the mobile RF front-end market is expected to grow from $19.2 billion in 2022 to $26.9 billion in 2028, a CAGR of 5.8%. By technology, the 2G, 3G and 4G segments are contracting, while the 5G segment is projected to grow from $13.2 billion to $23.0 billion. The 5G millimeter-wave segment is projected to grow from $1.5 billion to $2.2 billion.
3. Non-phone segments provide new growth for RF front ends
External front-end modules (FEMs) are increasingly the mainstream choice for mid- to high-end WiFi routers. Because the 2.4 GHz band has stronger penetration, PA, LNA and other RF functions were often integrated into the main transceiver in the WiFi4 era and did not require additional FEMs. With the wider use of 5 GHz in WiFi5 and WiFi6, where signal attenuation is greater, external FEMs are used to increase transmit gain and ensure link performance and range. For example, the Huawei WiFi6 router AX6 uses four 2.4 GHz FEM chips and four 5 GHz FEM chips.
CPE is the core device for fixed wireless access (FWA). The RF front-end market for CPE is expected to reach $2.0 billion by 2028. FWA operates by using CPE and other devices to receive mobile base station signals and convert them into WiFi for end users. According to Huawei, by the end of 2021 global 4G/5G FWA users exceeded 65 million, with 4G FWA accounting for 95%. It is projected that by 2025 the share of 5G FWA users will increase to 27%. FWA can connect homes, enterprises and IoT devices; 5G is enabling FWA to expand from homes toward enterprise applications. Yole forecasts the CPE RF front-end market will grow from CNY 414 million in 2022 to $2.0 billion in 2028, a CAGR of about 30%.
4. Vehicle connectivity and intelligence increase RF chip demand
The RF chip market for automotive applications is expected to reach $1.9 billion by 2027. In the Internet of Things era, an increasing number of end products beyond phones and PCs require network connectivity, including industrial automation equipment, smart home devices, smart city infrastructure and vehicles. Yole projects the automotive semiconductor market will grow from $44.0 billion in 2021 to $80.7 billion in 2027, with RF chip revenue increasing from $0.9 billion to $1.9 billion, a CAGR of 11.6%.
5. Non-mobile products are an important revenue source for RF chipmakers
Some RF chipmakers have expanded their target markets and product portfolios to diversify revenue. For example, Skyworks extended beyond phones and tablets into wearables, smart home, medical IoT and other IoT segments, and is expanding into autonomous driving, smart cities, artificial intelligence, machine learning and factory robotics. In FY2Q23 (period ended 2023-03-31) revenue from non-mobile products accounted for about 40% of Skyworks revenue. Qorvo reported that in FY2022 revenue shares from mobile and non-mobile products were 76% and 24% respectively.
