Phone Wars and the Current Challenges Wireless Semiconductor Manufacturers Are Facing

The trend towards the Smart Phone cannot be stopped anymore, the participants of the GABA Semiconductor IG event on September 17th, 2009 agreed.

Technology is converging, and people are using their phones for all sorts of applications, many of which had been exclusive of the PC world before. The application fields go way beyond simple web browsing. However, Smart Phones will not see as much single chip integration as ultra low-cost phones. Even though integration will advance, multi-chip solutions remain more cost effective and flexible in most cases. This is especially true, when looking at the different innovation speed in the areas of modem and application processor.

A question that brought up some controversy among the panelists was, whether the Smart Phone of the future will resemble a PC platform: Some argued that there would be little room for differentiation and all devices will provide ample performance to use with any given application, which will lead to faster pace towards commoditization and result in lower margins on the hardware side. Others were confident that there would be enough room for them to differentiate their products to keep up the current pace of innovation and the correspondent product replacement cycles.

Patents remain another threat for Hardware Manufacturers. For the upcoming 4G wireless technology standards, it is not yet clear whether this will turn out to be as much a minefield as it has been for the current 3G technology. In the past, patent officers often granted patents containing only little innovation, which led to many lawsuits regarding wireless technologies. Tarek Fahmi, Partner and Semiconductor IP and Patent Counsel at Sonnenschein Nath & Rosenthal LLP, said he received the impression that patent courts are currently making it harder for patent trolls to obtain license payments or prevent competitors from shipping their goods only because they are holding a patent.

In the future, however, core fields of innovation might shift away from the semiconductors towards other key components of the mobile phone such as the touch screen displays and the battery. Arbitrary battery form factors and more capacity will fuel longer phone run time without sacrificing attractive designs.

All parties agree that the battle around mobile phone software platforms is just beginning. Stay tuned for the next event on Phone Wars when we will be exploring a similar topic with software industry experts.

Slides from the presentation at the event are available at http://www.gaba-network.org/download/090917_GABA_Phone_Wars_I.pdf

Best regards
Hartmut Schittko