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4G Weekly Digest November 25th, 2009 - Volume 5, Issue 14

QCOM to Release New Modem Chips
By Pascal Deriot, Senior Analyst, WiMAX & LTE Equipment

Regardless of the strong investment in technologies such as FLO, low-power consumption display, universal wireless charging, application processors for smartbook, and healthcare initiatives announced last week, Qualcomm’s core business and technology remains the modem chipset. The sampling of the first Dual-carrier HSPA+ and multi-mode 3G/LTE chipsets demonstrates once again that QCOM leads the modem market, delivering state of the art solutions ahead of its competitors. Criticized by the cellular industry in 2008 because they didn’t position an LTE only modem coprocessor in their roadmap and also seemed to be late with LTE solutions scheduled for mid 2009, QCOM has never been a follower.

For almost two years, QCOM has been diversifying its cellular products portfolio with dedicated and optimized chips for the modem and data card market – the MDM family. Likely to be built around the same die as the MSM family when the size of the market didn’t justify a specific focus, the MDM chipset portfolio doesn’t integrate the multimedia features and silicon area of the first generation. No wonder QCOM has almost cannibalized a market poised to explode in the upcoming years; its 3G competitors are lagging behind the MDM family.

Let’s have a look at the incumbent chipset players: Freescale and Texas Instruments have publicly stated they want to exit the wireless baseband business. Nokia will never play in the merchant base-band market. ST-Ericsson owns a lot of technology ingredients but struggles reorganizing the ST Micro, NXP and Ericsson Mobile Platform joint venture. Infineon, despite impressive achievements in 3G, thanks to the iPhone’s momentum doesn’t have the necessary scale. Marvell lacks a proven software protocol stack and modem maturity. Broadcom ships limited 3G products and has to focus on winning more business with Nokia to gain market share. Mediatek has not yet shown strength in integrated 3G chips. Icera, a direct competitor in data card applications with a unique architecture approach, needs to grow its mobile revenue to survive. Japanese vendors have never proved overseas success.
WiMAX chipset players may have a time-to-market advantage leveraging their investment in OFDM technology. However, we don’t see how they could develop the entire solution, combining LTE with 3.5G and 2G IPs to deliver a multi-mode chipset. Actually, we believe that one of the biggest challenges that they all will face is the protocol stack software, not the hardware implementation. While LTE protocol stack may be more straightforward than 3G, the backward compatibility with HSPA and 2G will soon become a nightmare. We believe that the weakness of Texas Instruments’ and Freescale’s own protocol stacks, and the dependence with their lead customers (Nokia and Motorola respectively) played a significant role in their intention to exit the merchant business.

Coming back to QCOM touting a Dual-carrier HSPA+ chipset, here’s what we found: supporting 42 Mbps downlink closes the gap between HSPA+ and LTE throughput. It provides a true alternative to MIMO, reaching the same level of downlink performance without constraining the handset by the two antennas design. There are basically three methods to boost the HSDPA data rate: MIMO, multi carrier or higher order modulation (from QPSK to 16-QAM or to 64-QAM). The 14 Mbps basic speed of HSDPA can be doubled by supporting MIMO or dual-carrier. Alternatively, a 64-QAM implementation can boost the data rate by 50% over 16-QAM, reaching 21Mbps. Applying MIMO or dual-carrier will lead the data rate to the famous 42 Mbps. Dual-carrier gives more arguments to operators who have prioritized an upgrade of their HSPA network such as T-Mobile, Vodaphone, and AT&T. While service continuity in HSPA/LTE interworking may be an important requirement to maintain user experience, it is not the driving factor for HSPA+ deployment. In fact, when NGMN defined their interworking scenarios, they prioritized the LTE/HSPA interworking case over LTE/HSPA+, not expecting a broad rollout of HSPA+. We had the same kind of discussions of service degradation between WCDMA and EDGE due to the bearer limitation to support applications such as video streaming or video sharing. Bottom line, we think that Dual-carrier has the potential of delaying LTE deployment and of becoming one of the biggest hypes of Barcelona 2010.

Finally, when we look at QCOM’s modem segmentation presented by Steve Mollenkopf during the New York Analyst Day, we feel we understand now what defines a tiered roadmap.