Linley: Mobile Peaked in 2013?

Last week was the Linley Mobile Conference. Mobile is a huge semiconductor market and, outside of Intel, is the main driver for next generation process technologies. A new generation of mobile phones comes along, fills the leading edge fabs for a year or two and then moves on to the next generation. Nothing comes close to requiring so many wafers and requiring such a steep ramp.

Linley Gwenapp (whose name always makes me think of those puzzles for kids: rearrange these letters to make a famous Hollywood star…Gwyneth Paltrow…so close) gave the opening keynote as usual. The reality, though, is that although the mobile market is huge and a lot of time is burned up on whether Apple’s next part will be made by TSMC, Samsung or Global, the reality is that the market has got rather boring. Smartphone growth is still significant but it is slowing. Broadcom followed TI and Freescale out of the market and, despite having a world-class team, could find no buyers. Spreadtrum merged with RDA Micro.

The high-end phones all seem to be going internal. Apple has made its own application processors (AP) for some time and Samsung has switched from Qualcomm to its own Exynos. Huawei and probably others seem to be going that route too. The merchant AP market has 4 vendors that have, along with internal, a combined 95% market share: Qualcomm, Mediatek, Samsung and Spreadtrum.
The tablet market is both more boring and more interesting. There are more suppliers but the market has basically stopped growing. Every year the leader in the tablet AP market seems to change. Over the last four years the leader was nVidia, then Allwinner, then Intel. Last year was Intel only because they shipped a lot of “negative revenue” with each part. They have reduced that and so in 2015 the leader is expected to be Mediatek. And, of course, the true market leader every year was Apple with their own processor used only in the iPad.

The result of all of this is that the merchant AP market (excluding internal) peaked two years ago in 2013. A year or so ago only Qualcomm seemed to have a viable LTE baseband (BB) modem but now there are 11 vendors and it is no longer any sort of differentiator. Going forward, integrated AP+BB will be obligatory in a couple of years (perhaps outside of tablets). It will be interesting to see if Apple adds BB to their Ax line or continues to have a separate BB, historically from Qualcomm but rumors about Intel abound here.

The big unknown going forward is how much Moore’s Law is stalling. If transistors stay at a fixed cost, then going to a new process generation will result in faster, lower-power but more expensive chips (assuming more capability is added). Apple probably doesn’t care too much if their Ax part costs $25 or $30 but if it goes to $50 next year and $100 the year after that will require a lot of additional capability to justify the cost. Just a few more cores on the GPU is probably not enough.

See also Demler: Quadcore is Just For Marketing

The APs contain differing numbers of cores, from four big and four little at the high end, to two small at the low end. Having four big cores seems a waste since they cannot really be used simultaneously much due to thermal reasons but as I have written about before, four big cores (and eight total cores) is just for marketing. Liley reckons that the mainstream will settle down on four cores with eight as a premium configuration. There is also a fast shift to 64-bit going on, with almost all APs by 2018 being ARM v8 (apart from a tiny sliver of Intel cores if they still play in the market).

New things coming to mobile, enabled by off-load processors:

• always on functionality
• voice recognition without needing to push a button
• pedometer (fitbit in your phone)
• indoor inertial navigation
• vision processing (augmented reality)

Wearables were a 5 million unit market in 2014 with high end devices around $79 and knock-offs at $15. Smart watches are obviously coming but it remains to be seen how popular they get. Apple iWatch today costs $349 but others are $50. At that lower point, bunding a watch with a high end phone becomes a no-brainer. Linley’s forecast is that by 2019 smart watch units will be 17% of smart phone units, growing to 400M units. Smart glasses will just be a tiny niche and fitness bands will be replaced by watches. Some medical wearables may exist but the market size is limited by the people who are sick in the right way.

My own feeling, based just on having a Pebble watch (that I pretty much never wear since it only shows true SMS messages and not stuff from WhatsApp and WeChat etc) and a Fitbit (which I often wear until I need to re-charge the battery and then I forget it for days) is that the current offerings are just not enough. But if they could do a good job of monitoring true health (blood pressure, ECG etc) that would be the killer app. After all, who wouldn’t pay a few hundred dollars to get a few hours advance warning of serious health problems such as an impending heart attack.