RF front-end chip is the core of communication, and consumer demand and technological innovation bring new opportunities. RF front-end is the core of communication terminal and the fastest growing sub-market of semiconductor industry. At present, the RF front-end of typical smart machines is worth more than $20, of which 90% are filters, PA, RF switches, and 10% are antenna tuning, LNA and envelope chips. With the upgrading of communication technology, front-end innovation continues to advance, and the value of stand-alone computers continues to improve. In terms of demand, in addition to terminal equipment, the penetration of the Internet of Things will also enhance the demand for RF front-end. Under the trend of technological innovation and networking equipment growth, the RF front-end market is expected to grow from 16 billion US dollars to 35.3 billion US dollars in 2017-2023, with a compound annual growth of up to 14%.
5G upgrade accelerates RF front-end innovation and modularization further boosts the front-end Market. In the 5G service scenario, the RF front-end must satisfy the characteristics of high frequency, high integration and low latency. The three major communication technologies, CA, MIMO and QAM, radio frequncy machine have a direct impact on them: the upgrade of CA will increase the front-end demand synchronously, the upgrade of MIMO will increase the downlink front-end demand, and the upgrade of QAM will require higher front-end linearity. Under the trend of high frequency, the process of filter, RF switch, PA and LNA will be changed, which will create an excellent opportunity for domestic manufacturers to catch up. In addition, factors such as bandwidth explosion, space compression and complexity increase promote the modularization of the front-end, and significantly enhance the value of the RF front-end stand-alone. We believe that LCP packages that can achieve extremely high modularization are expected to benefit from the front-end modularization trend.
The main front-end market is temporarily occupied by overseas giants, while 5G is expected to restructure the front-end market structure. After the wave of semiconductor mergers and acquisitions in 2010-2017, American and Japanese oligarchs accounted for 9 components of the front-end market. Among them, American manufacturer Broadcom (Avago), Skyworks, Japanese manufacturer Murata, TDK, Taiyo Yuden and so on occupy the mid-high-end market, while Korean manufacturer mainly focuses on the mid-low-end market. As a technology-intensive manufacturing industry, RF front-end has very high barriers, complete production line, baseband capability, Fab capability and module capability to build four core competitiveness of front-end manufacturers. We believe that before 5G arrival, the front-end market structure will remain stable, the US factory will continue to maintain the top position, and Qualcomm will rise rapidly with its complete RF program. After 5G arrival, Sub-6GHz band may continue the current pattern, while the market pattern of millimeter-wave band may be reconstructed by baseband manufacturers, which also brings breakthroughs to domestic manufacturers.
