Thursday, December 9, 2010

ABI Projects RF PA Revenue for Mobile/Cellular Markets

ABI recently talked about the rapid Chinese TD-SCDMA rollouts and the often-maligned GSM/GPRS/EDGE equipment markets have benefited the base station RF power amplifier and RF power device markets. The stated that GSM/GPRS/EDGE RFPAs and devices are still shipping in the millions. The Asia-Pacific region is presently accounting for more than 50% of the RF power semiconductor devices sold into the mobile wireless infrastructure segment.

Recent Chinese TD-SCDMA base station deployments have been massive, and have buoyed RF power vendors to a tremendous degree. That demand is expected to strengthen the market until at least sometime in 2011, and the Chinese deployments will probably only start to slow in 2012. And in a happy coincidence for equipment vendors, 2011 is the expected time frame for LTE deployments in developed countries to really gather a head of steam. Below is a nice graph of how they project the mobile/cellular PA market to breakdown over the next 5 years:

Microwave Backhaul Favored in W. Europe and Most of Asia-Pac

A new ABI report says that capital expenditure on mobile backhaul varies greatly by region and by technology. While most countries face similar current or future struggles to reduce network congestion, the solutions being adopted differ according to existing infrastructure, network generations, and government mandates and incentives.

One major division is whether to use optic fiber or microwave for mobile backhaul. CAPEX for microwave backhaul will peak in Western Europe this year at almost $4.4 billion, more than triple the figure for the next-highest region, Asia-Pacific. The European spending surge is due to the expansion of 3G networks to new areas, as well as a few initial 4G network deployments.
“Once that wave is completed in Western Europe, microwave backhaul will be left alone for a while,” comments ABI Research analyst Xavier Ortiz. “Following the 2010 spending spree, Western European microwave backhaul CAPEX will tumble in 2011 to just over half its peak level.”

Virtually all world regions will see some increase in microwave backhaul CAPEX over 2011-2013, followed by a gradual decline. The reasons vary by location. In Asia, many 3G networks will be rolled out during that period, and others will be expanded to reach remote, underserved areas. According to practice director Aditya Kaul, “Asia’s investment in microwave backhaul would be even greater were it not for the Chinese government’s mandate to use fiber for the country’s 3G and 4G networks. Although microwave is less expensive and faster to deploy, a governmental commitment to fiber means huge economies of scale, and fewer worries about zoning permissions.”

In the United States, the situation is very different. The prevalence of fiber optic cable in many parts of the country combined with the high cost of tower leasing mean that interest in microwave as a backhaul solution is lower than anywhere else. “Large service providers are saying they will only use microwave where fiber is unavailable,” says Ortiz.

It is interesting how Fiber and MW backhaul use differ from region to region. The economics and policies are very different in each region. I would think it would be mostly based on cost but that is not the case. Do you think China will ever change their mandate for Fiber only?