WiMAX and LTE Semiconductor Opportunities

WiMAX and LTE Semiconductor Opportunities

Forward:

WiMAX and LTE (Long Term Evolution), NGMN (Next Generation Mobile Networks) provide opportunities for participation of fabless design and fabrication companies as well as established integrated semiconductor companies. The field promises lower barriers to IPR (Intellectual Property Rights) and new evolutionary paths where innovation and combinations of features can help forge competitive advantage. However, momentum has started making it more difficult for new entrants who do not have leverage into markets to gain a foothold.

WiMAX and LTE developments incorporate emerging sets of technologies and enable wireless mobile broadband which broadens the scope and diversity of applications. Despite very active development, many segments of technology ride on top of long developing technology that have their roots in wired and wireless communications, consumer electronics, IT/Networking, and Internet and entertainment. This convergence, long more talk than reality, is now appearing in such products as Apple’s much talked about iPhone and more dramatically in WiMAX which proposes a new business model for operators and service providers and a more open model for chip suppliers.

With the great opportunities that NGMN provides, there is a need to consider how competition is already positioned, where the needs of the market are unmet and evolving, and how IPR is organized and may need to be licensed. This article cannot answer all of these questions but will provide an outline of where the market is, where it is headed and who owns major sets of IPR and how the licensing regime is starting to shape up. Although many of the segments of technology will be similar, because the 3GPP LTE standard is not yet finalized, emphasis of the article will be on WiMAX.

1. Brief Background and Market Forecast

802.16 and WiMAX were developed upon the need to provide ubiquitous broadband coverage through the use of new wireless technologies. The efforts had roots among disparate microwave broadband access and specialty service providers who saw the necessity to shift to standard implementations in order to take the industry into mainstream markets and achieve a needed ecosystem.

Because the merits of the technology of the ‘fixed’ version and endorsement by Intel and other leading companies, a large number of mobile wireless leaders have joined the effort. The pace of development in WiMAX has resoundingly accelerated, and now a broader assemblage of companies including service providers, media and Internet giants has mounted efforts.

The early success at achieving development momentum has caused a shift in 3G cellular development: The long term prospect of shifting to OFDM from CDMA has been accelerated. LTE now appears 2-4 years away from commercial deployment. Like WiMAX, LTE uses OFDMA based technology and requires new or transitioned spectrum and is not an evolution of existing wireless links. LTE’ s hope of transitioning the 3G business model hinges on marketing and not technology momentum.

2. Forecast:
   
   WiMAX is a ‘front loaded business model’ which also describes some of the difference in business model between it and 3G/LTE. Intel and others will load WiMAX into laptops, ultra portable laptops, smart phones and off-the-shelf subscriber units. This loading of the market will cause a rapid ramp in demand for WiMAX chips that gain volume product sockets even though initial subscriber rates lag far behind.
   
   
   

3G use for data is now growing at a rapid pace. This is helped by adoption in Asian and is now spreading to the North America and other regions. The success is compounded by higher ARPUs and profit margin.

Wired broadband growth is forecast to slow as saturation rates in developed regions reaches saturation:

Wireless broadband is growing rapidly. WiMAX and LTE are expected to se rapid growth due to market seeding and desirable service profile that will capture market share in developed and grow new customers in emerging markets:

1. Standards
   WiMAX is based primarily on 802.16 but also embraces additional wireless, networking, and computing and device standards. The WiMAX Forum has recently issued guidance to members that WiMAX and 802.16 are not synonymous: that WiMAX can include additional standards under the umbrella. This fits current trends in enabling chip technology and markets for multi-mode, multi-spectra and multi simultaneous radio designs. It is foreseeable that WiMAX systems may include cognitive radio (802.22) as well as 802.11 and perhaps LTE via integrated chips sets if market conditions are compelling.
   
   
   

2. Market Forecast

3. Current WiMAX semiconductor suppliers
   
   WiMAX has attracted a large number of chip suppliers that range from fabless design shops to the largest integrated IC manufacturer. This is aided by open standards, international participation including among emerging economies and FRAND IPR development model.

1. Mass Market Chip Suppliers

Intel, Fujitsu are leading chip companies supplying the emerging WiMAX developments. TI, Broadcom are potential new entrants. TI now supplies communications DSPs for WiMAX base stations but has yet to provide SoCs and a more concerted product focus. Broadcom is rumored to be doing work on WiMAX SoCs.

2. Fabless

Over 12 fabless design companies have announced or are in production of WiMAX chips. These include BeCeem, Sequans, RunCom, Wavesat, Comsys, DesignArt, and picoChip.

3. Captive

NextWave and Motorola are notable companies that are developing WiMAX chips primarily for internal consumption. Recently NextWave has announced merchant chip supply ODM partners with intent to sell product into open markets. Motorola has developed WiMAX SoC with TI and we anticipate expansion of the relationship to include sale of chips outside of the captive market. TI has also partnered in 3G multi-mode chip developments with Comsys and other fabless design shops which brings up speculation that this may extend to TI mounting their own WiMAX multi-mode SoC chip.

4. Technology Gestation and Trends

WiMAX mobile is based on OFDM/OFDMA for which the core technology has been developed over a period of several years and is used broadly in wired and wireless and defense industry communications. OFDM is used in DSL, DVB, Wi-Fi, and WiMAX and will become the leading core technology for NGMN systems. WiMAX also includes HARQ, adaptive modulation, MIMO, AAS which have been diversified the IPR content of systems and devices.
The diversity of technology segments can be seen in the following graph. For reasons of graphic simplicity, this shows only a portion of segments of technology important to converged NGMN products but gives some understanding of the range and increase in IPR activity that affects the emerging field:

Accelerated development has been occurring in MIMO-AAS. This development is reflected in patent applications: MIMO & AAS patent applications now far exceed those for core link technologies used in WiMAX. This is because MIMO-AAS is a relatively fresh field of development and holds great potential for achieving performance and cost effectiveness. Technologies such as MIMO-AAS also can be viewed as segments that extend wireless broadband without effecting core compatibility and standards compliance. This allows flexibility to extend WiMAX (or LTE) to superset functionality that differentiates chips suppliers.

4. IPR Ownership, Policies and Licensing Trends

1. Diversity of Ownership

WiMAX IPR is highly diversified. The following graph shows diversification of OFDM IPR. Similar diversity of contributions can be seen in new segments of MIMO, AAS, and wireless networking methods.

2. Key IPR Holders

Key holders of WiMAX IPR include Samsung, Nokia, Nortel, Intel, Qualcomm, Motorola, Ericsson, ATT, Interdigital. But besides ‘counting patents’ that might have been used in WiMAX because companies say they are, IPR that is essential to WiMAX is more specific to companies who have participated in 802.16 and WiMAX Forum developments. A study of essential IPR distinguishes Samsung and smaller companies that show relatively low patent counts due to participation in standards. Of course, some of these companies have been acquired by Intel and others.
Qualcomm’s WiMAX IPR position has come into question: Qualcomm holds several OFDM and other segments of technology generally used in WiMAX and has acquired Flarion, Airgo and other companies involved in 802.20 and 802.11 respectively. However, the essentiality of the IPR is questionable.

3. Licensing Policies and Trends

Recent court and trade commission decisions have put an emphasis on adherence to FRAND licensing agreements. US Supreme Court rulings have raised the bar for obviousness which preferences the value of fundamental and essential IPR. We believe that this bodes well for WiMAX IPR licensing being relatively free of disruptive contention and having lower royalty rate structure than found in 3G.

Most of the leading WiMAX IPR holders assert that they do not plan to aggressively enforce their IPR. Paul Zeineddin, Intellectual Property Counsel, Samsung Electronics, for example, says Samsung would like to see cross-licensing and reasonable licensing of IPR develop. Similarly, Intel, Nortel, Motorola and others have similarly supported low IPR contention in order to stimulate rapid and diverse industry development.

5. Opportunities for WiMAX and LTE Semiconductors

1. Already too Crowded?

Among questions for any company now or contemplating supply of WiMAX ICs is whether there is room for market entry or continued development of new generations of standardized WiMAX ICs. This question is determined on company strengths and ability to either innovate beyond current levels or leverage market or manufacturing capabilities. WiMAX mobile is expected to ramp to high volume very rapidly due to seeding of established embedded product markets. This front-loading of markets also is expected to cause a rapid ramp in open market supply. And since strict standard and WiMAX Forum compliance is required and IPR hurdles are manageable, barriers to entry are low and are built to core uniformity.

Differentiation of vendors has occurred in chip architecture and level of integration and advanced power reduction and management capabilities. But these avenues for differentiation have been pursued leaving limited room for fresh exploitation. For example, several suppliers now plan similar power level reductions through shift to smaller geometries and new higher isolation property processes and materials fabrication.

Differentiation also occurs in development of chip architecture and design platforms that leverage development more easily across scalable devices and base stations. That is characterized by picoChip’s use of ‘massively parallel’ DSP architecture that is implemented in modular software within a common design environment. Complimented with ARC and MIMO-AAS processing, this architecture provides a viable platform for development from femto remote devices to macro base stations. This approach is 1^st to be applied to WiMAX/OFDMA WWAN but is not expected to remain unique for long.

The device side is also driven to optimize SoCs including designs implementing multiple cores and signal process segmentation. This helps in development of more powerful yet low cost and low and scalable power remote stations and subscriber units which also help set the stage for Smart Distributed Wireless Broadband Networking, SDWBBN, an area of development with great potential for product differentiation because of improvements in performance and cost efficiency.

Unless the manufacturer is able to leverage process and design technologies or market influence to remarkable advantage, this scenario forces innovation that goes beyond core wireless chip implementation. Companies now wishing to enter the field or enhance competitiveness must look to SDWBBN, developing complete product families including integrated and well supported development platforms.

2. Time to Market

The deployment of wireless systems based on the new set of OFDM, MIMO-AAS, and smart distributed networking technologies has only begun. Theoretical limits for spectrum reuse and network enhancements show that we have just now scratched the surface. Much innovation must take place along the current path to achieve near the levels of performance expected of 4G as elucidated by ITU for IMT-Advanced: 100 Mbps per user mobile, 1 Gbps per user fixed-nomadic.

We anticipate industry development somewhat along the lines of that seen in WiFi: a growth in number of chip vendors followed by rapid decline in prices and consolidation. However, WiMAX and LTE will be more diverse by nature of serving a far wider scale of applications and spectra and becoming a common platform for integration of networking across wireless systems.
This means that timing is critical to exploit stages of development which now occur at a rapid pace but careful planning and execution can lead to successful exploitation of opportunities yet to evolve.

3. Where Innovation Can be Leveraged

As mentioned, a large portion of innovation has started to occur outside of core wireless link capabilities. That area is common ground and is able to be exploited via semiconductor time-to-market process innovations and market leverage rather than basic wireless design innovation.

That is not the case for MIMO-AAS, MU-MIMO, CO-MIMO, virtual base station aggregations, adaptive backhaul, self-forming and redundant multi-hop networks and sub nets, and other aspects of SDWBBN development

4. Long Term Wireless Trends and Convergence

Wireless is converging between wireless link technologies via multi-mode and multi-spectra ICs, RFICs and antenna components and development of standards into multi-service ‘framework’ platforms that are extensible rather than targeted development for a specific application (examples mobile cellular or Wi-Fi in a specific spectrum). This approach encourages a more holistic consideration for IC development. ICs can be targeted for achieving low power primarily in the highest volume spectrum applications but competition for that space will be fierce. In order to differentiate, suppliers must leverage markets, processes or design innovation.

Convergence will occur between WBB access, 3G mobile, and WLAN. And it is also occurring across industries including IT/networking, PCs & laptops, consumer electronics, and Internet and broadcast media. This creates new opportunities and conflicts. IPR remains a central issue both to seek leverage and avoid conflicts. IPR analysis can be used as a tool to organize a wide view of industry development. This gives engineering and corporate management a useful tool to help direct planning and effective use of resources to catch successive waves of developments and map them to semiconductor process and design methodologies.

WiMAX and LTE use similar sets of technologies and are driven by common IC process, antenna and RF component, and very similar dynamics for MIMO-AAS and SDWBBN development. However, IPR specific to the two standards and differences in implementations creates obvious differentiation of product efforts. But equipment platforms that hold much in common are being pursued by Nokia, Nortel and other major systems developers who hope to sell into both WiMAX and LTE requirements. This commonality also extends into programmable and probably into future multi-mode chip sets that can share many common functions.

Convergence beyond multi-mode with WiFi and PANs remains in dispute: there is reason to think that WiMAX can serve local area networking needs in a more integrated fashion than Wi-Fi, particularly for high availability/high reliability uses.

In Conclusion:

Wireless is shifting to a new evolutionary platform of technologies that will be extended for several years similar to development in IT/networking but with even a greater focus on innovation during the ‘catalyst years’ of development.

copyright: Robert Syputa, WiMAXPro, LLC, all rights reserved