An accelerated U.S. vs. China trade war has elevated “decoupling” into a trendy buzzword to describe the possibility of a breakup between two of the world’s most powerful economies. The question at hand, though, is if there really is a decoupling going on? Perhaps not on the macro-economic level, but more significantly in the supply chain of the global electronics industry?
World governments are prepared to spend hundreds of billions of dollars to reconfigure the global supply chain. The answer to the question will guide those efforts.
The latest “Smartphone Design Win Monitor” released by System Plus Consulting (Nantes, France) offers some illuminating data points. The System Plus Smartphone Design Win Monitor analyzes eight smartphones per quarter, and 32 phones a year, offering “a good representation of the market,” noted Romain Fraux, System Plus Consulting CEO.
The report breaks down smartphone component suppliers not only by company names, but also by the nationality of their headquarters. Further, the report identifies providers of most “semiconductor content” per phone (based on die size area), delves into silicon process nodes and wafer sizes, and reveals the technology choices (on processors, CMOS image sensors, NAND & DRAM, etc.) made by different smartphone vendors.
The latest Monitor is timely, arriving during a chip shortage that’s been dogging the electronics industry for months. System Plus’ report provides clues to how many wafers today’s smartphones would require and how much of those wafers are driven by leading edge technology. The analysis could add new perspective to the debate if the investment into new leading-edge fabs — currently proposed both in the United States and in Europe — is warranted.
Smartphones under the hood
The mix of the phones is based on smartphone shipment data. Fraux explained that if a smartphone vendor has a 20 percent market share, 20 percent of System Plus’ quarterly teardown will be based on its phones.
System Plus gets the shipment data from Lyon-based boutique market/technology research firm Yole Développement, of which System Plus is part.
The table below shows 32 smartphone models System Plus examined over the last 12 months.
Apple vs. Huawei
Fraux stressed that the Smartphone Design Win Monitor is not designed to sort out the U.S. vs. China trade war. But the report is valuable because it delves into the supply chain of smartphones and technology innovation trends.
Consider Apple and Huawei: the System Plus report reveals that the two smartphone giants rely on two very different component supplier ecosystems.
With its iPhone 12 5G model, Apple sourced more than 65 percent of components (in terms of the number of units) from companies based in the United States. In contrast, Huawei’s nova 7 SE 5G Youth model is 34 percent Chinese, 20 percent Japanese and 11 percent German.
Fraux pointed out that functions of these two smartphones are almost the same. “You can make a call, you can play, you can take pictures…and yet the choice of the components each smartphone vendor made is quite different.” Clearly, Huawei uses more components from China. Fraux said, “It’s not secret. It’s been a dream of Huawei.”
Asked if Huawei actively sought to source more components from China after the U.S.-China trade war broke out, Fraux demurred a judgment. He said that Huawei’s reliance on Chinese vendors “started a long time ago.” But the Smartphone Design Win Monitor also answers the two oft-asked questions that surfaced after the U.S. blacklisted Huawei and banned U.S. companies from suppling components to the Chinese smartphone giant: If not U.S. component vendors, what are Huawei’s options? Will they seek suppliers from Europe, Japan or elsewhere?
System Plus’s data above shows who stepped up to fill the gap in Huawei’s smartphone.
Semiconductor content in smartphones
It’s important to note that System Plus makes a distinction between “components” and “semiconductor content.” A component could be a package of electronics with several layers of silicon dies inside. By looking at the design wins by die area, the report reveals which semiconductor suppliers have dominated the most die areas in smartphone models by Apple and Huawei.
For iPhone 12, Qualcomm (207 mm2), Micron (165 mm2), Apple (145 mm2), Kioxia (110 mm2) and Sony (92 mm2) dominate the die areas. With Huawei’s nova 7SE, die areas are occupied by Samsung (513 mm2), HiSilicon (267 mm2) and Sony (53 mm2).
Using the same data but by looking at the nationality of chip companies (where they are headquartered, not where their chips are manufactured), System Plus’ report reveals that Apple is sourcing mostly from the U.S. players, while Huawei is relying heavily on Korea (Samsung) and China (HiSilicon), noted Fraux (see the graph immediately above).
The aftermath of the U.S. ban on Huawei is more pronounced when analyzing the semiconductor content (in die size) in each phone. “Since Huawei is not able to manufacture semiconductors by using TSMC’s advanced technologies, it becomes more complicated for Huawei to find the alternative,” observed Fraux. “I don’t know what Huawei’s next phone will be like, but we are quite impatient to analyze it once it’s out.”
He added, “We know Huawei lost a lot of market share already… Now, we would like to see what component integration” Huawei can accomplish.
No big memory players in China — at least not yet
Analysis of the supply chain by die consumption also reveals a Chinese weakness.
Fraux noted, “Even if Huawei is using semiconductors from a Chinese player such as HiSilicon, HiSilicon occupies a lot less die area than that of Samsung.” He said that because Samsung is providing mostly memory, which consumes a lot of die size. The problem is, said Fraux, “There are no big memory players yet in China… as advanced as Samsung.”
On the other hand, in measuring die size consumed in the iPhone 12, “We can see that many players are involved, who are offering quite big amount of die size,” Fraux added.
A good example is Qualcomm, which dominates semiconductor content in the iPhone 12.
In the past, the San Diego smartphone chip giant wasn’t in Apple’s supply chain. This status dramatically changed with the launch of the U.S. version of iPhone 12. Unlike iPhone 12 introduced in other countries, the US version is compatible with 5G millimeter wave. Qualcomm is a leader in the millimeter wave market.
Apple vs. Huawei: Evolutionary paths
System Plus also showed how the evolutionary paths Apple and Huawei diverged in semiconductor content in a variety of models.
System Plus looked, for example, at Apple models that include iPhone X, iPhone XR, iPhone 11, iPhone 11 pro, max and iPhone 12. Die-area analysis by nationality shows fluctuation among models. “But the fluctuation is mostly linked to the memory,” observed Fraux, revealing whether a particular iPhone uses more NAND memory from Kioxia (formerly Toshiba Memory Corp.) or Micron. While iPhone semiconductor content evolution reflects the U.S. vs. Japan memory battle, the upshot is that the U.S. chip companies dominate most of its share in Apple iPhones.
Huawei’s evolution contrasts sharply. System Plus looked at Huawei’s smartphone models ranging from Mate 10, P20 and P30 to Mate 30 pro and P40 pro. “You can clearly see that Huawei started to remove most U.S. technology — since P20 pro and Mate 2 — two or three years ago,” observed Fraux.
The chart shows that throughout the iPhone’s evolutionary path, one company based in Switzerland has consistently supplied a chunk of semiconductor content to Apple. That would be STMicroelectronics (headquartered in Geneva).
The Franco-Italian semiconductor company has made steady contributions to Apple’s iPhones, among them time-of-flight (ToF) sensors, a near-infrared camera, an OLED display PMIC and a proximity sensor featuring a flood illuminator.
Technology innovation in semiconductor content
The Smartphone Design Win Monitor isn’t all about Apple vs. Huawei comparisons. The report also illustrates market trends in technology innovation and choices made by smartphone vendors.
Below is a comparison in semiconductor content between iPhone 11 pro max and iPhone 12 pro max. Choosing to pack more DRAMs in iPhone 12 pro max, 6GBytes of memory, compared to 4GB in iPhone 11 pro max, Apple increased silicon consumption by 20 percent. That translates into Apple bringing more opportunity to its memory-content provider, noted Fraux.
An even bigger change is happening in the RF area. With iPhone 12 pro max (a version available in the United States) using a 5G millimeter wave, Apple increased RF semiconductor content by 75 percent. “This has brought a big, big market opportunity especially to Qualcomm,” said Fraux.
Another area of interest in the slide above is an application processor. By moving from 7 nanometer to 5nm process node technology, Apple was able to shrink die size by 18 percent while packing in more transistors to improve processor performance, explained Fraux.
Speaking of Apple’s past apps processors, Fraux noted, “Apple has been raising the processor capability for every new iPhone model,” adding more features and functions. Apple, however, has kept (or shrunk) the die size despite more transistors inside the processor.
The same goes to the iPhone’s form factor. “From generation to generation, Apple also has kept the size of the phone,” he added, despite adding features such as lidar, face recognition, 5G and more memories.
Smartphone’s wafer consumption
Given wafer shortage concerns brewing in recent months, the industry wants to know how many wafers its smartphone production will need, and how many wafers are driven by leading edge technology nodes.
In its Smartphone Design Win Monitor, System Plus analyzed wafer consumption by die size used by various smartphone chips and concluded that leading edge technologies (defined as 14nm down to 5nm node) represent 30 percent of die area, based on smartphones the company analyzed in the first quarter of 2021. Driving that leading edge wafer consumption are DRAMs and application processors.
By using this calculated die area, combined with first-quarter unit shipments of 353.3 million smartphones estimated by Yole, System Plus extrapolated that the entire smartphone market in the first quarter of 2021 would require:
- 2.2 million wafers using 14- to 5nm technology nodes.
- 1.8 million wafers using 28- to 15nm technology node.
- 1.0 million wafers using 90- to 32nm technology nodes.
Given the current debate over whether the industry should build new wafer fabs in the United States or in Europe, System Plus created the following infographic based on data it has collected. “For sure, the leading edge is important,” said Fraux, but in terms of die area consumption in a phone, “it’s only around 27 percent of chip area would need leading edge. So, by wafer count, you would still need the rest — 73 percent — based on legacy nodes.”
But today, when every new fab on the industry’s agenda is about leading-edge nodes, who takes care of legacy node fabs? Fraux said, “That’s a good question. In fact, some players are already concerned about that.”
Take the example of STMicroelectronics. The portfolio of ST products designed into iPhones (which don’t require leading-edge process node) might partly explain why ST hesitates to join a potential European Union semiconductors alliance. According to Reuters, ST CEO Jean-Marc Chéry endorsed the European Commission’s initiative while adding that ST has no interest in taking part. Fraux said, “ST is focused on their business, which is good. ST is doing a lot of legacy chips, like power management and others.”
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