The bill of materials (BoM) cost of the LTE-capable Google Pixel Watch is estimated to be $123, according to a BoM analysis by Counterpoint’s component research practice. As the first smartwatch built on the back of Google Wear OS and Fitbit OS, the Pixel Watch comes with a dual-processor solution. Compared to the previous Fitbit watches, which had a lightweight proprietary OS running on MCUs (microcontroller units) supplied by STMicroelectronics or Cypress, the new system is based on a high-performance processor to unleash the power of the latest Wear OS 3.5 and also features a co-processor or MCU to optimize battery life, which had been a competitive strength of Fitbit watches. The change not just introduces richer features but also results in a significant increase in the BoM cost.

Google Pixel Watch BoM Cost Structure by Function

Source: Counterpoint’s BoM Analysis Service

Note: Figures may not add up to 100% due to rounding.

Processing and Memory

Based on our BoM analysis, the Exynos 9110, manufactured at Samsung Foundry’s 10nm process node, is the main processor. It integrates a dual-core ARM Cortex-A53 CPU at 1.1GHz, a Mali-T720-based GPU and an LTE Cat.4 modem, which is paired with the audio codec and PMIC in the SIP-ePoP package. Thanks to the high integration, the layout of the 32mm-diameter PCB is not congested. However, the first-generation Pixel smartwatch would have delivered faster, smoother performance had Google built its system on the more advanced Exynos W920 platform.

The co-processor is NXP‘s MIMXRT595S. It is an Arm Cortex-M33-based MCU with DSP and GPU cores. The combined cost of the two processors and Kingstone 32GB+2GB ePoP memory accounts for nearly 27% of the total BoM cost.

Display subsystem

Another key functional block of the Google Pixel Watch is the 1.2-inch “Always-on” OLED display. It has a resolution of 450×450 dots or 320 ppi and supports up to 1000-nits brightness for a clear display in sunlight.

Above the screen is a custom 3D Corning glass (Gorilla Glass 5) which can save the model from waist-high drops.

Sensors

As a smartwatch with healthcare and fitness features, the Pixel Watch is equipped with multiple sensors, including a 6-axis inertial sensor and a digital compass (both from STMicroelectronics), an altimeter, an ambient light sensor (ALS) and a light encoder to enable the haptic crown.

In addition, the heart rate monitoring system consists of Texas Instruments’ analog front end (AFE) and three sets of infrared LED and photodetector, which is behind the ECG feature.

Connectivity and Cellular

The Pixel Watch delivers more independent-use experiences thanks to the support of LTE Cat 4 communication, which consists of Samsung’s S915 transceiver, Skyworks’ highly-integrated SKY53737 diversity receiver and SKY77643 multi-mode, multi-band PA module, Qorvo’s antenna switch, and multiple duplexers from muRata.

Besides, the design also includes standalone GPS chip BCM47765 and Wi-Fi/Bluetooth combo BCM430132 from Broadcom, and STMicroelectronics’ ST54J1ATNN NFC chip to support eSIM and Google Pay.

Design wins: Samsung, BOE biggest beneficiaries

Samsung not only provides the highly integrated main chipset but also supplies the LTE transceiver and other paired components, collectively accounting for around 20% of the total BoM cost.

BOE, which is the exclusive supplier of the smartwatch’s custom 1.2-inch-diameter OLED display, captures over 14% of the total BoM cost to rank second in terms of cost contribution.

Conclusion

Thanks to the launch of the Pixel Watch, Google has managed to further expand its hardware portfolio under the Pixel family. The industry expects the move will help increase the popularity of the Wear OS ecosystem. But when compared with the current market leader, the Apple Watch series, which differentiates itself by leveraging the high integration of in-house hardware and software, and refined design, and accounts for approximately one-third of total shipments, there is still room for the Pixel Watch series to improve. Through the deep collaboration with Samsung, Google is likely to empower its next-generation Pixel Watch with a more powerful, integrated, intelligent and secure processing platform.

Ethan@counterpointresearch.com

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The global smartphone image sensor market had a disappointing 2022. Even as the annual smartphone shipments dropped nearly 11% amid the unfavorable macro environment, the multi-camera trend decelerated with less adoption of low-pixel cameras for depth-sensing and macro-lens applications. The related CIS (CMOS Image Sensor) sales entered a period of contraction and a sizable inventory correction was made to alleviate the oversupply situation, particularly for 8MP and lower-megapixel sensors.

According to Counterpoint’s Smartphone Camera Tracker, global smartphone image sensor shipments were down mid-teens compared to 2021, with all major vendors suffering different degrees of decline. But when it came to the revenue in dollars, Sony managed to achieve a YoY growth as Apple, which was estimated to have contributed half of Sony’s mobile CIS revenue, further improved the iPhone camera specs during the year.

Sony Benefits From Apple’s Image Sensor Upgrades

Source: Counterpoint BoM analysis service

For instance, the iPhone 14 Pro and Pro Max feature a brand-new 48MP image sensor for their rear main cameras, a larger-size ultrawide sensor and an autofocus-capable front sensor. Thanks to the upgrades, Sony was estimated to have added more than $6 per unit or approximately $300 million in sales in the second half of 2022.

In the Android camp, Samsung LSI also benefited from the camera enhancement trend and improved its product mix, which partially offset the significant loss in shipments. Taking the first-mover advantage in mass-producing sub-0.7μm high-resolution sensors, Samsung shipped an estimated 200 million affordable 50MP image sensors in 2022. The 0.64μm-based Samsung S5KJN1 was a great success. It has good versatility and has been widely applied not only in mid- to low-end smartphones’ rear main cameras but also in front or ultrawide cameras of premium models. Moreover, Samsung still dominates the supply of 100MP and above sensors and has raised the bar higher with the commercialization of 200MP sensors (ISOCELL HP1 @ 0.64μm, HP3 @ 0.56μm). By the end of 2022, the accumulated shipment volume had exceeded 150 million units.

Unlike Sony and Samsung, which shifted their focus to providing high-megapixel products, the sales performance of OmniVision, Galaxycore and SK Hynix was more susceptible to the contraction in mobile CIS demand. All these three vendors were estimated to have recorded a double-digit YoY decline in their revenues in 2022.

Smartphone Image Sensor Market Share By Vendor, 2022

Source: Counterpoint Smartphone Camera Tracker

The smartphone CIS market became more consolidated in 2022 in terms of revenues. Sony expanded its share to slightly over 54%. The top two vendors accounted for around 83% of the total market revenue. The market consolidation is expected to continue in 2023. Samsung’s new 200MP lineup and Sony’s large-area 50MP sensors, such as the high-profile IMX989, will compete for the premium camera design wins. Despite the shipment and revenue declines in 2022, we expect the mobile CIS market to quickly return to the growth track, as long as the camera system is still at the core of smartphone upgrades, thus resulting in improvements in resolution, sensor size and even integration of AI capabilities.

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The post Global Smartphone CIS Market Revenues, Shipments Dip in 2022 appeared first on Counterpoint.

In Q2 2022, the overall market revenue for diverse smartphone-related RF front-end (RFFE) components, mainly including RF PA (power amplifier) integrated modules, receiving modules and discrete components such as filters, switches, LNAs (low-noise amplifiers) and power trackers, was down 14% QoQ and 6% YoY, according to Counterpoint’s Smartphone RF Front-end Tracker.

Global smartphone shipments were down 9% YoY in Q2 2022, and the growth rate is expected to fall further in Q3 2022. Against the backdrop of such rising uncertainties, OEMs, particularly in the Android camp, became more conservative in managing inventory and their destocking efforts led to significant order reductions for general RF components, interrupting the secular growth trend of the smartphone RFFE sector. In this context, major vendors showed a mixed sales performance.

Smartphone RFFE Market Revenue Decreased 6% YoY in Q2 2022

Source: Counterpoint RF Front-end Tracker, Q2 2022

Qualcomm managed to deliver a 7.6% YoY revenue increase for RFFE components, building on its leadership in providing high-performance mobile platforms for premium smartphones. In Q2 2022, the shipments of flagship models powered by the Snapdragon 8/8+ Gen 1 exceeded 10 million with a much stronger presence (share climbed up to around 79%) in the Samsung Galaxy S22 family. This momentum will continue, resulting in robust demand for the paired 4G/5G PA-integrated and mmWave modules. Besides, we saw the spreading adoption of Qualcomm’s diversity receive modules across platforms at the cost of muRata.

Skyworks’ RFFE revenues were almost flat YoY, with more contribution from Apple and Samsung (the top two clients were estimated to account for approximately 90% of Skyworks’ Mobile revenue of $764 million in Q2 2022) but less exposure to China-based OEMs (<10% of Skyworks’ Mobile revenue), as its product portfolio is positioned towards the mid-to-high tier where there is a high level of customization requirements.

Qorvo’s smartphone RFFE revenues decreased 11.3% YoY in Q2 2022 due to reduced smartphone production across its Android clients (collectively contributing to around 60% of Qorvo’s MP revenue of $733 million in Q2 2022), although the company secured new design wins, such as the first shipments of low-band PAMiD (LB PAD) modules to Samsung, and ramped up production of mid/high-band PAMiD (MHB PAD) modules for the upcoming Google 7 series.

Broadcom, which has been providing MHB PAD modules for Apple’s iPhones and Samsung’s premium models, saw its RFFE revenues rise 12.2% YoY in Q2 2022, primarily driven by the ramp-up of production of the iPhone SE 2022.

muRata’s RFFE revenues from smartphone applications experienced a sharp fall of 25.5% YoY in dollar terms. The decline was largely due to the significant yen depreciation as well as the plunge in shipments to its Android clients in China.

China RFFE vendors are facing greater challenges as the low-end smartphone segment is more vulnerable to the impact of the worldwide economic downturn and rising inflation. For instance, Maxscend, the leading RF solution provider in mainland China, reported a more than 25% YoY revenue drop for Q2 2022 in dollar terms.

Smartphone RFFE revenue growth forecast for 2022 revised down

Globally, high inflation and economic slowdown are prompting consumers to cut unnecessary spending, leading to a prolonged smartphone replacement cycle. Major Android OEMs have lowered their production targets for the second half of 2022 and the resulting inventory correction is expected to persist through early 2023.

On the other hand, the annual 5G smartphone shipment volume is expected to increase by 20%, while the high-end segment is indicating a higher level of resilience against the ongoing market contraction. For instance, Apple is estimated to ship 25 million more 5G iPhones than it did in 2021, with equivalent production volume for the iPhone 14 series in H2 2022 compared to its predecessor.

Therefore, Counterpoint has revised down its 2022 growth forecast for the smartphone RFFE market to the low single-digit range (1%~3%) to reflect the greater-than-expected impact on demand for RFFE components. But in the longer term, the RFFE market is riding on the back of the worldwide spread of 5G and mmWave and has great potential for secular growth.

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The post Smartphone RF Front-end Market Revenues Down 14% QoQ in Q2 2022 appeared first on Counterpoint.

The overall sales of diverse RF front-end components, mainly including PA (RF power amplifier) integrated modules, diversity receive modules and RF discrete components such as filters, switches, LNAs (low-noise amplifiers) and power trackers, was close to $4.4 billion in Q1 2022, according to Counterpoint’s smartphone RF front-end industry research.

In Q1 2022, 5G accounted for half of the total smartphone shipments and exceeded LTE shipments for the first time, thus driving greater RF semiconductor content in smartphones. Thanks to richer RF content and the corresponding modularization trend in support of Sub-6GHz and mmWave 5G capabilities, RF front-end suppliers possessing a broad technology portfolio, especially Qualcomm, Skyworks and Qorvo, achieved significant YoY sales growth and continued to lead the market.

Smartphone RF Front-end (RFFE) Revenue Share by Vendor, Q1 2022

Qualcomm led the market with 23.5% share registering strong growth. As always, the first quarter was filled with a batch of new flagship launches, mostly powered by the Snapdragon 8 Gen 1. The increasing mid-to-high 5G design-win pipeline helped Qualcomm further expand its leadership in the growing RFFE segment along with its complete modem-to-antenna solution.

Qorvo also gained share with increased business from Android-based smartphone brands. Qorvo saw steady rise for its solutions across Samsung’s both flagship and mass-market 5G A & M series smartphones. For instance, Qorvo is providing a highly-integrated PAMiD (PA Module integrated with Duplexer) module, RF switches and Wi-Fi 6 front-end modules for the Galaxy S22 series. Besides, Qorvo was recognized by HONOR as the latter’s only core strategic supplier of RF front-end components, which will help Qorvo’s growth as Honor has been growing at a rapid clip since the brand separated from Huawei.

Skyworks slipped to third place in terms of smartphone RFFE revenue, along with the decrease in iPhone sales due to seasonality and pandemic-related disruptions in China. In Q1 2022, Apple alone was estimated to contribute more than 80% of Skyworks’ earnings from smartphone applications. Samsung was again a 10%+ client for Skyworks’ mobile business. Skyworks’ higher exposure to Apple and Samsung is both a boon and a bane and client diversification will be the key.

The top three vendors continued to command more than half of the smartphone RFFE market, followed by Murata and Broadcom, both registering a sequential sales decrease. Chinese players represented by Maxscend and Vanchip managed to expand their market share with increased shipments of L-PAMiF modules to major OEMs.

High single-digit growth expected for 2022

Although prospects for the 2022 smartphone market have darkened since the Ukraine war outbreak and new round of pandemic in China, the average RFFE content will still continue to increase due to the spread of 5G and new frequency bands to be adopted for global roaming or higher network speeds (mmWave). The smartphone RF front-end business’ overall revenue is still likely to see high single-digit growth in 2022 to exceed $18 billion.

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The post Qualcomm, Qorvo, Skyworks Lead the $4.4 Billion Smartphone RFFE Market in Q1 2022 appeared first on Counterpoint.

Xiaomi 12 Series Failed to Strengthen its Share in Premium Segments (>$600)

Thanks to promotions during the 2022 Xiaomi Fans Festival, Xiaomi managed to improve its sales share in the flagship battlefield in April. However, the brand desperately needs new flagship models to replace the Xiaomi 12 and 12 Pro, whose performance has been far less than expected. Against this backdrop, Xiaomi has introduced the new Xiaomi 12S line-up with optimized user experiences.

Sitting at the top of the new series, the Xiaomi 12S Ultra is a successor of the Xiaomi 11 Ultra. The latest Snapdragon 8 Gen 1 Plus platform, the all-new Samsung E5 LTPO 2.0 OLED display and the industry-leading 1-inch 50MP main camera, as well as a tie-up with Leica, represent the major areas of upgrades.

According to Counterpoint Research’s BoM Analysis Practice, producing a Xiaomi 12S Ultra equipped with 8GB RAM and 256GB storage costs around $516. The market price of the model is RMB 5,999 or around $899. The processing, display and image sub-systems, along with memory, contribute nearly 67% of the total manufacturing cost. Below is the functional cost structure of the ultra-premium model.

Xiaomi 12S Ultra BoM Cost Increases to $516

In terms of suppliers, Qualcomm, Samsung and Sony are among the beneficiaries. Qualcomm has a wide range of design wins, from the SoC and paired power management and RF transceiver to RF front-end components, connectivity IC and audio codec. The latter two vendors provide the display panel and LPDDR5 RAM, and image sensors respectively.

Xiaomi has shipped more than 2 million Xiaomi 11 Ultra smartphones so far at the same starting price of RMB 5,999 or around $899. The Xiaomi 12 Ultra is expected to take the baton from here and help improve Xiaomi’s profitability in the ultra-premium segment.

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The post BoM Analysis: Xiaomi’s 12S Ultra Costs $516 After Camera, SoC, Display Upgrades to 11 Ultra appeared first on Counterpoint.

Amid the intensifying premium smartphone battle in China, HONOR has successfully upgraded its flagship lineup with the Magic4 Ultimate. Sitting at the top of the Magic4 series, the Magic4 Ultimate, like its predecessor, brings great innovations in hardware and software.

Equipped with 12GB RAM and 512GB storage, it is still priced at ¥7,999 or around $1,230 for the China market. The model’s performance is comprehensively improved with the Qualcomm Snapdragon 8 Gen 1 chipset and a customized AI ISP. I have been using the smartphone for a while and it impressed me in three key areas:

• The Magic4 Ultimate strives to present a combination of beauty and advanced technologies. Its exterior consists of a 6.81-inch bezel-less quad-curved screen, a flashy stainless steel middle frame, and a refined nanocrystal ceramic shell that creates a sense of elegance.
• The gaming experience, built on the fourth-generation Snapdragon Elite Gaming engine and HONOR’s enhanced GPU Turbo X technology, is smooth and enjoyable.
• The last but the most important is the sophisticated and powerful imaging system. The rear penta-camera setup is led by a 50MP, 1/1.14-inch large main camera and performs extremely well in capturing true-to-life images with superb clarity and rich details day and night. I will discuss the three highlights and other features in detail in my review below.

HONOR strengthens its presence in China’s flagship battle with Magic4 Ultimate

In 2021, China’s premium smartphone market recorded significant YoY growth with nearly one out of four smartphones being sold at above $600. This lucrative segment is becoming ever more important, particularly for China-based brands looking to improve their product mix and achieve meaningful earnings against the overall decline in smartphone sales, while enhancing their brand image.

The new round of competition started following the announcement of the Snapdragon 8 Gen 1 SoC in December 2021. Soon after the availability of the vivo X80 Pro in late April 2022, major Android brands launched 25 premium models with the flagship SoC inside. To stand out from the crowd, HONOR made great efforts in unleashing the full potential of the system by leveraging its self-developed Turbo X technologies, and also implemented multiple heat dissipation solutions, including the graphene film and VC plate, to maximize the computing power. In addition to the cutting-edge SoC, HONOR empowers the Magic4 Ultimate and other models from the Magic4 series with a brand-new LTPO display and upgraded imaging system. According to Counterpoint’s China Smartphone Weekly Tracker, the monthly sales of the Magic4 series quickly crossed 200,000 units in April, having been among the best-selling Android flagship phones in China since March.

Commenting on the upgrades from the Magic3 Ultimate, Research Analyst Mengmeng Zhang said, “The Magic4 Ultimate undoubtedly has greater computing capabilities, with the Snapdragon 8 Gen1 promising 20% faster CPU, 30% faster GPU and 4x faster AI performance compared to the Snapdragon 888. On top of the industry-leading 5G mobile platform, three standalone processors, represented by the dedicated AI ISP, play an important complementary role and allow users to explore more premium and unique experiences. Besides, the improvements in display, camera, security and battery life also stem from using the advanced LTPO technology, improved camera setup, and more secure fingerprint and faster-charging solutions.”

Magic4 Ultimate vs Magic3 Ultimate

Design: Emphasizes sense of harmony, symmetry, elegance

The Magic4 Ultimate largely inherits design characteristics from its predecessor. The front side of the 163-mm-long body is fully covered by a super-curved nanocrystal glass, which is engineered for more comfortable single-handed use and better protection from damaging drops. The redesigned iconic Eye of Muse is still an eye-catcher but creates greater symmetry and balance with the periscope camera relocated to the center, and the new pattern looks more modern and attractive. The Magic4 Ultimate also blends more streamlined styling into the new nanocrystal ceramic back, on which the runway-like protrusions neatly surround the camera bump.

Display: Smooth, vivid, immersive visual experiences

The Magic4 Ultimate is equipped with a flagship-level, HDR10+ OLED display supporting the best-in-class color accuracy. It has a resolution of 1312×2848 pixels (around 460ppi density) and allows users to view pictures and videos with sharp details. The display also realizes the combination of LTPO-based 1~120Hz adaptive refresh rate and 1920Hz PWM dimming technology, which provides double-edged benefits – better eye protection and power saving by switching the refresh rate to the lowest possible when displaying static content.

On top of these, HONOR, together with Pixelworks, enables premium viewing experiences leveraging technologies such as “Always-on HDR” and MEMC (Motion Estimation and Motion Compensation). Powered by the dedicated display processor, the Magic4 Ultimate supports on-the-fly conversion of SDR videos to HDR quality and intelligent increasing video frame rate to eliminate motion blur, leading to a more vivid and fluid display.

Gaming: Ultra-smooth, realistic experience

The fourth-generation Snapdragon Elite Gaming engine is designed to push the limit of mobile gaming experience. It features more than 50 enhancements, in which technologies such as “Adreno Frame Motion Engine” and “Variable Rate Shading Pro” can effectively alleviate the GPU load, thus improving frame rate, picture clarity and power consumption while gaming.

The powerful engine is well complemented by the latest GPU Turbo X technology. By implementing the mobile gaming-oriented “AI Super Rendering” and fully taking the advantage of multiprocessor synergy, the upgraded GPU Turbo X can highly improve the graphic processing efficiency and also elevate the gaming performance. Consequently, we can play the graphically demanding game titles with less power but without compromising the visual quality.

In addition, the ultra-high-speed 5G and Wi-Fi 6 connection, paired with HONOR’s LINK Turbo X technology, provides a lag-free gaming experience.

Photography: Industry-leading performance

The biggest highlight of the Magic4 Ultimate is the versatile world-facing “Eye of Muse” system. Its flagship-grade main camera is powered by the Samsung ISOCELL GN2 and a customized 8P wide-angle lens set. With 50 million 1.4μm-sized pixels and a large aperture of f/1.6, the default camera can take in more light and offers great low-light performance and dynamic range.

To better restore what you see, the Magic4 Ultimate adds another 50MP camera, especially for spectral enhancement, with which it can reproduce more accurate colors, textures and real-light and shadow effects.

Below is a good example of how the Magic4 Ultimate restored the color on the glass and retained the decorative details without overexposing them.

The above image was shot in default mode. The colors of lights, plants and flowers are very close to reality and the dynamic range is well balanced, retaining good details in the indoor areas.

In addition, the rear camera system includes a 3.5x optical zoom periscope camera and a 126-degree ultrawide camera. The two 64MP auxiliary cameras are located close to the main camera, forming a triangular arrangement that is designed to facilitate the implementation of HONOR’s “Ultra Fusion Photography”.

The technology provides an innovative approach for cameras to work together, thus maximizing image quality by fully utilizing the strength of different lens modules. As shown below, in the overlapped zoom range, the process has two steps. First, multiple frames shot by each camera are merged, respectively, and then the resulting images are further aligned and combined into a single photo.

HONOR’s Fusion Photography Technology Fits into Magic4 Ultimate’s Impressive Zoom Range

Benefiting from the enhancement of “Ultra Fusion Photography”, we can capture moments more sharply and clearly than ever. The photo below presents clear details of the leaves in the foreground and the building at the far end.

When working alone, the ultrawide and periscope cameras also show great performance. The former has a 7P lens set supporting a 126° field of view and is among the best choices for grand landscape photography. It also incorporates two pieces of the free-form lens, which significantly improve edge distortion. Below is a photo shot at 15 mm equivalent focus length where the straight lines on the wall look quite natural.

With the support of autofocus, the ultrawide camera can also be used for close-up shots, allowing you to click stunning photos of flowers as shown below.

The periscope design supports up to 100x hybrid zoom capability, making it a perfect fit for long-distance shots. Below is a photo captured at the 7x zoom level. It still retains rich details while minimizing the noise and the words on the poster are quite readable.

The camera system is not only a real success in daylight conditions but its performance in low-light environments is also great, and this is largely due to the adoption of the independent AI ISP. The customized chipset has up to 28.8TOPS computing power and supports the nearly real-time process of a burst of raw images at different exposure settings, leading to a greater night photography experience, including the support of 4K Super Night mode videos.

The image below was captured using night mode, where the pink light falling on the glass ceiling and tree leaves were accurately reproduced with little noise in the sky area. Thanks to the support of OIS optical stabilization for both the wide and telephoto cameras, it is much easier for us to shoot great night photos, no more worrying about unintentionally blurring them with a hand jitter.

The camera system has more to offer. To suppress lens flare and improve the image quality against the sunlight, HONOR applies the super anti-flare coating technology to the lens surface. Besides, the flicker sensor and 8×8 dToF sensing camera are preserved. The latter can effectively help improve the autofocus speed and accuracy, especially in low light. Combining with the large aperture of the main camera, it also brings better bokeh effects like in the picture below which presents a gradually blurring foreground and background.

Video performance

The Magic4 Ultimate also provides impressive video capabilities. Thanks to the “Dual Chain Computational Photography & Videography” algorithm, we are allowed to capture high-quality photos while recording a 4K video with little compromise. The AI-based “Magic Take” function can automatically identify highlight moments when recording and transform them into short clips or dramatic pictures. Moreover, the Magic4 Ultimate further extends its 4K 60FPS video capability to the Night and Magic-Log mode, and the outputs are relatively smooth even when you are moving.

Front cameras

Moving on to the front side, the dual-camera system sits in a hole-punch cutout on the top left. It consists of a 12MP selfie camera and a 3D depth camera primarily for face unlocking. The former features a 100° field of view to make taking a group selfie much easier. It is enhanced by a number of AI-based features such as portrait beautification, background blurring and anti-distortion, and also supports 4K video shooting.

High security and long battery Life

The Magic4 Ultimate also makes decent improvements in security and battery life. For a safer but more convenient user experience, HONOR not only upgrades the fingerprint solution from optical to more accurate ultrasonic technology but also applies an independent security chip to provide hardware-level protection. All of this, combined with the “Dual TEE Security OS”, makes the Magic4 Ultimate a highly secure flagship model.

Moreover, HONOR introduced a practical feature, “AI Privacy Call”, to address the pain point of sound leakage when making a phone call in crowds. The new feature supports intelligent sound direction control, and can significantly reduce sound leakage while maintaining a clear voice.

To further ease battery anxiety, HONOR increases the fast-charging speed with the support of the 100W wired charging. Tests show the Magic4 Ultimate’s 4,600mAh battery can be charged to 100% within half an hour.

Conclusion

As a top flagship offering, the Magic4 Ultimate is armed with a valuable package of hardware components and features, with the camera system being the biggest bright spot. Although there is space for improvement, such as a smoother preview when switching the lens, its overall performance is rated as the best by DXOMARK. By combining the evolving “HONOR Image Engine” and powerful AI ISP, the Magic series is set to fully harness the power of AI and push the boundaries of mobile photography.

The post HONOR Magic4 Ultimate Review: Impressive Camera Capabilities, Smooth Gaming Experience appeared first on Counterpoint.

Global smartphone brand HONOR, which gained full independence from Huawei in November 2020, successfully launched the V40 smartphone in China in January. The HONOR V40 is offered in two SKUs – with 128GB and 256GB onboard storage. Unlike its predecessor that uses Huawei’s HiSilicon Kirin 990 SoC, the new smartphone is powered by a Dimensity 1000+ from MediaTek. It offers a well-balanced combination of connectivity, multimedia, AI and imaging performances for premium smartphone design.

Despite marginally lower pricing compared to the V30, HONOR has managed to bring new features and improvements to the V40. These include display and imaging, faster connectivity with 5G and Wi-Fi 6, and wireless charging, among others. I have been using the HONOR V40 for a while and it has impressed me in three key aspects.

The HONOR V40 sports a stylish design consisting of a flashy glass shell at the back and a vibrant 6.72-inch waterfall screen on the front. Leveraging the MediaTek HyperEngine 2.0, the gaming experience is also good on the V40. Lastly, the main camera is enhanced with a large pixel 50MP RYYB sensor (1/1.56-inch optical format). I will discuss these and other features in detail in my review below.

New HONOR Strategy: Expand Presence in High End, Build a Global Leading Brand

The HONOR V40 starts at around $560 (3,599 RMB), within a price range which is targeted by other Chinese brands as the best springboard to expand presence in the premium battlefield. During the launch event in January 2021, HONOR Device CEO George Zhao sent a clear message that the independent brand will extend its high-end product lines while aiming to restore its market share in China and gain greater popularity overseas.

Though it would be challenging for the new company to differentiate its products without access to HiSilicon chips and other distinct Huawei technologies, HONOR is looking to focus on innovation, quality and service to maintain its competitiveness.

Commenting on the strategy of new HONOR, Counterpoint Research Analyst Flora Tang said, “HONOR smartphones had achieved great success in China and managed to build a strong presence in the overseas markets, including Europe, MEA and Latin America. Since the spinoff, the company seeks to resume its ties with the global supply chain. HONOR has inked new deals with key component vendors such as MediaTek, Sony, Samsung and Micron Technology. Meanwhile, HONOR is actively expanding its offline retail footprint across the Chinese cities. With a broad recognition and expertise in smartphones, we expect HONOR to recapture its lost market share in China in 2021. As an independent company, the youth-centric brand will further enrich its smartphone portfolio, catering to consumers from different income and age groups.”

Design: Combination of Light and Matte Finish Translates into Striking Appearance

HONOR attempts to blend richer fashion and technology elements into the external design of V40. The glass shell at the back features a meticulous layout, and the so-called 1:3:9:27 partition aims to create a feeling of harmony. This is coupled with a sophisticated coating process by combining the effects of light and matte finish, which enables color gradients across the surface. Depending on the angle from which you look at, the “Magic Night Black color” variant presents colorful rays consisting of violet, blue, green and purple, among others.

The rectangular camera array sits on the top left corner, incorporating a triple camera matrix, an LED flash and a laser auto-focus sensor. It does have a larger camera bump, which is well blended with the overall design style. However, the camera bump does make the phone wobble when placed back down on a flat surface like a table.

Display: Vivid Screen, Fluid Scrolling Experience

One of the highlights of the HONOR V40 is the curved 6.72-inch OLED screen with a resolution of 2676×1236 pixels (400ppi). It enables an immersive visual experience while offering rich details. The screen also supports 10-bit color depth and HDR10, which allows it to display over one billion colors and cover the entire DCI-P3 color space. The screen is indeed impressive when watching videos and playing games.

Thanks to the curves at both sides, the smartphone fits in my hand quite nicely. Although it is over 163 mm in length, it can be a plus when opening a secondary window for multi-tasking. Moreover, I think HONOR has an ideal solution to avoid accidentally touching the curved edges, which has never happened during my usage.

Another key feature of the advanced screen is the support for up to 120Hz refresh rate and up to 300Hz touch response, which provides smoother experiences paired with rich animation effects introduced in the latest Magic UI 4.0 skin on top of Android 10.

Even without upgrades to the newer Android 11, Magic UI 4.0 still delivers much enhanced interaction and navigation experience. The various animation elements have been further optimized, with parameters like duration, speed and direction being fine-tuned for smooth and comfortable switching. For productivity, Magic UI 4.0 has improved the multi-window display, including the support for scalable floating window size. It also supports real-time multi-language translation and quick note creation by scanning texts and pictures. With richer AOD (always on display) elements from clock interfaces to artistic patterns, Magic UI 4.0 gives the V40 an impressive look even in standby.

Gaming: Lag-free Experience with Rich Enhancements

In addition to the powerful screen, the V40 continues pursuing the gaming experience with deep integration of software and hardware resources. The 7nm Dimensity 1000+ SoC features an octa-core architecture. There are four Cortex-A77 cores clocked at 2.6GHz to take care of the heavy lifting tasks. The chipset also includes four Cortex-A55 efficiency cores clocked at 1.8GHz. It offers a good balance between power and efficiency.

The upgraded GPU Turbo X technology can unleash the full power of the Mali-G77 GPU, and the performance boost provides much-improved experiences in playing graphically demanding games.

The smartphone also supports the all-new Hunter Boost engine with rich features such as display enhancement, RAM cleaning, prevention of inadvertent touching, and distraction-free use which keeps those annoying notifications, calls and messages away when you are focusing on the game. Besides, it is also equipped with dual speaker and dual linear vibrator, enabling more immersive audio experience and better haptic response.

During my usage, the smartphone ran smoothly and did not show any signs of lag, even when playing heavy-duty game titles like Game for Peace. The V40 raises the bar for gaming experiences in its segment, with good optimization towards graphics processing, display, interaction, connection and power consumption.

Photography: 50MP Super-sensing Camera Lets you Click Pro Grade Photos

Rear Cameras

Camera has always been a focus point in HONOR smartphones, and the V40 is no different. This time, HONOR has implemented a triple camera setup, featuring a 50MP 1.0µm-pixel-sized main sensor of f/1.9 aperture, paired with an 8MP ultrawide camera and a 2MP sensor with a macro lens. Besides, a laser sensor is mounted right next to the flash LED for high-speed autofocus, particularly in dark light conditions.

Building on the customized RYYB-style color array from image sensor leader Sony, the 50MP primary camera delivers good results in daylight and low-light scenarios. When triggering the snapshot in the night mode, the camera can capture multiple photos within seven seconds at different exposure settings. By combining them intelligently, it provides a photo with good clarity and rich details. Below are some samples.

The primary camera can also click detailed photos in daylight conditions with a high dynamic range, even when shooting against the sunlight. Below are some samples shot in the default mode, all retaining good details in the shadow areas. But like most smartphone cameras, the V40 has a bit of trouble in eliminating glare.

With the AI function on, the camera can automatically detect objects in the scene, such as the sky, flowers, trees, food and buildings, before applying specific parameters tailored to them to beautify the pictures, or intelligently blur the background scenes to highlight the object. The results look quite natural at most times.

For taking detailed portraits, the V40 features an “AI RAW Super Portrait Engine”. This enables comprehensive optimization from exposure, white balance, edge detection and landscape segmentation to skin, facial and body beautification. This allows the smartphone to capture studio-like figure photos.

The camera app also features rich filter effects. The B/W filter works perfectly well for distinctive architectures. You can further enable the Super-high Pixel option to capture much more details and finer texture.

As the phone does not have a dedicated telephoto lens, the primary camera is being used to crop photos, which can offer up to 3X digital zoom. As you can see, there is no or little loss of quality. However, adding a long-focus lens can be a better choice for getting a clearer view of distant subjects, especially in low-light conditions.

For small objects, the 2MP macro camera is a good addition, allowing you to click nice macro photos from a distance of 4 cm.

The 8MP sensor with an ultrawide lens is also fine-tuned. There is no noticeable color difference when switching between the wide and ultrawide lenses. But the camera can further improve in reducing the distortion around the corners.

Front Cameras

Moving on to the selfie camera, the 16MP image sensor goes with a color temperature sensor. This enables a more realistic color reproduction in different light environments. With the beautification effect on, the camera supports features such as face smoothing, like speckle and wrinkle removal, and skin whitening. With the V40, you can click good selfies to share on media platforms.

The camera app also includes a Pro Mode for photography enthusiasts who want to take more control. There are even more camera features for you to explore.

Video Performance

The V40 also supports up to 60 frame-per-second (fps) 4K video recording. It also features a dual-view video-shooting function – by making the rear and front cameras work simultaneously, you can have two perspectives within the same frame in videos. The video quality is good to record memorable moments.

Multi-gigabit 5G Speeds and Superfast Charging Tech

During the launch event, HONOR showcased the V40’s Sub-6GHz 5G test results with a downlink speed exceeding 2Gbps. It also supports dual 5G SIM and can intelligently select 5G network operators. By combining multiple connection technologies right from 5G to 4G and dual-band Wi-Fi, the smartphone is capable of providing uninterrupted streaming experience.

Finally, we come to battery life. The smartphone comes with a 4,000mAh battery. It can last more than a day with moderate usage. My usage included one hour of gaming and about three hours of video and music streaming, and a couple of calls. Net surfing, Wechat and camera usage were also a part of the routine.

With the single-cell triple-electrode battery design, the smartphone supports 66W fast-charging and 50W wireless charging. Based on my experience, the 66W USB charging feature charges up to 20% in just 5 minutes, which can provide up to 3 hours of video steaming. A full charge takes as little as 35 minutes.

Conclusion: Honor V40 Brings Premium Features and Flagship Experience at a Reasonable Price

HONOR has done a good job with the V40 in terms of exterior design, display and gaming performances. Primary camera and fast-charging experiences are good too. It also features a multi-gigabit 5G and Wi-Fi connection, which offers lag-free video steaming and gameplay.

However, there are still subtle details like the photo-videography experience for the smartphone to further improve. It could have been a better idea to have a dedicated telephoto lens instead of a macro lens, which could have made the HONOR V40 an even more attractive option.

Also Read: Strategic Reviews and Insights on Latest Smartphones

• Comparing Mid-range 5G Smartphones for Around $700 and Below
• vivo V20 Pro 5G: Impressive Design, Capable Cameras and 5G Make it a Promising Upgrade
• Google Pixel 4a Review: Compact Camera for Stunning Still Photography
• Samsung Galaxy Note 20 Ultra 5G Review: Pinnacle of Android Flagships
• Vivo X50 Pro: A Camera Disguised as a Smartphone
• Asus ROG Phone 3 Review: Gold Standard for Gaming Smartphones
• Micromax In Note 1 Review: Noteworthy Comeback, With Room for Improvement

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Producing a 128GB iPhone 12 mmWave (millimeter-wave) smartphone will cost Apple up to $431, 26% higher compared to the iPhone 11, according to the latest bill of materials (BoM) analysis by Counterpoint’s component research practice. Despite over $27 cost savings due to the simplified RF design, the BoM cost of the sub-6GHz-only model for overseas markets still increased by 18%.

Assuming a 38% mmWave mix, the blended materials cost for the iPhone 12 with 128GB NAND flash is nearly $415, a 21% increase over its predecessor. Application processor, 5G baseband, display and 5G RF components represent the major areas of the cost increase.

Exhibit 1: iPhone 12 BoM Cost Increase Over iPhone 11

First TSMC 5nm process-powered application processor

The new generation of Apple mobile processors, the A14 bionic, contains a whopping 11.8 billion transistors, up 39% from the A13’s 8.5 billion units. This provides significant performance improvements in aspects of CPU, GPU and Neural Engine. Given the much higher 5nm wafer cost (nearly double that for 7nm), the application processor alone is estimated to introduce a cost increase of over $17. Our analysis also suggests Apple’s self-designed components including the A14, PMIC, Audio and UWB chip make up over 16.7% of the overall BoM cost.

The return of Qualcomm

Qualcomm’s advanced cellular technology found its way back with Apple’s latest launch. Besides the SDX55M 5G baseband, Qualcomm also provides the paired transceivers and RF discrete components for both sub-6GHz and mmWave versions. For the iPhone 12, Qualcomm will be the second-largest electronic component supplier behind Samsung Electronics.

Display upgrade from LCD to OLED

Apple has upgraded the display of its base models to OLED, which supports high dynamic range and higher peak brightness. From the cost perspective, the shift from LCD to OLED in the iPhone 12 is a big jump, resulting in an over $23 cost increase. Both Samsung Display and LG Display are set to supply more panels to Apple.

Increased cost to enable 5G

The iPhone 12 has been equipped with more RF components to support the 5G-related spectrum. Our analysis shows the blended cost increase from the RF subsystem is around $19. Besides Qualcomm, other major content gainers are Skyworks, MURATA and Avago.

Diversified sources of supply

Apple has managed to diversify its supply sources. For the iPhone 12, the memory orders are split between industry leaders, with Samsung and KIOXIA (Toshiba) supplying NAND flash, and SK Hynix and Micron supplying LPDDR4X. The camera content shares are largely gained by Sony, LG Innotek and Sharp. NXP and Broadcom continue providing solutions for wireless connection and display/touch control. Cirrus Logic, Goertek, Knowles and AAC dominate the audio design. TI and ST are major suppliers of power and battery management IC. Apple has also expanded its cooperation with ASE/USI, leveraging the latter’s SiP (System in Package) packaging technology to miniaturize the design.

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On September 16, Facebook launched the second generation of Oculus Quest. The new standalone VR headset is powered by the Qualcomm Snapdragon XR2 platform, which is dedicated to creating ultimate VR experiences. It makes a significant leap in computing performance across CPU, GPU and AI capabilities. Compared to its predecessor, the Oculus Quest 2 comes with a Fast-Switch LCD Display, supporting up to 90Hz display refresh rate and 50% more pixels, a redesigned 6-DoF touch controller, and a 256GB onboard storage option.

Exhibit 1: Quest Specification Comparison

Despite the performance upgrades, Facebook has managed to bring the hardware price down. With the standard edition being introduced at $299, the Oculus Quest 2 is expected to quickly gain traction. Since the launch of its first standalone design, or Oculus Go, back in May 2018, Facebook has been focused on building a strong user base for Oculus by introducing affordable VR headsets. The Quest family, thanks to its competitive pricing, the comfort of wearing, and ease of playing, has become the major driving force behind the user growth and now is at the center of the Facebook VR ecosystem.

Exhibit 2: Oculus Sales Estimates During Each Initial Rollout Period

During the first year after its launch, the Oculus Quest saw its sales far ahead of Oculus Go. Meanwhile, Oculus ecosystem developers were able to rake in over $100 million. With the worldwide lockdowns due to the COVID-19 pandemic, consumer spending on Oculus Quest content increased significantly. The revenue in Q3 2020 alone is expected to reach $50 million, greatly inspiring content creation around the Quest platform.

Facebook plans to stop producing the Oculus Rift S in 2021, it is focusing on development of standalone type of VR headsets just like the Quest 2, which will leverage Oculus Link for consistent PC VR gaming experiences. With more production capacity shifting to the Quest 2 in 2021, it will outpace the previous Oculus gadgets and set a new high during October 2020~October 2021.

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Since the early commercial launch of 5G mobile services in April 2019, the pioneer operators in developed telecom markets have been progressively promoting the wide-scale deployment and adoption of 5G networks. As of mid-July 2020, 93 commercial 5G networks are live across the world, mainly distributed in Europe, East Asia and Oceania, Middle East, and North America regions.

Exhibit 1: Europe, Asia & Pacific Have the Most 5G Live Networks

Under the guidance of the “5G Action Plan”, European states showed clear ambition of getting ahead in the global race to 5G commercialization, with Elisa, Telia, Swisscom, Sunrise, Vodafone, TIM, and EE being in the first batch of operators rolling out 5G mobile services worldwide. By the end of 2020, all member states of the European Union are expected to have commercial 5G services, making Europe the home nearly half the live 5G live.

The East Asia and Oceania region is leading the growth of 5G mobile connections; in May 2020, the accumulated 5G connections in China and Korea surpassed 30 million and 6.8 million, respectively. According to Counterpoint’s Market Outlook service, global 5G connections will dramatically increase to over 1.7 billion within five years since the initial roll-out, and China alone is projected to make up roughly 47% of the total connections by the end of 2023.

Exhibit 2: China, North America, Western Europe will Experience Higher 5G Penetration

Until then, 5G penetration (the percentage share of total mobile connections) in US & Canada and China will reach over 50%. Europe will take on unbalanced development in each sub-market with 5G penetration reaching an average of 26%. India, as the second-largest smartphone market, is still transitioning to LTE, although Reliance Jio, with nearly 400 million subscribers, is expected to lead the 5G adventure in the nation and launch commercial services in 2021. 5G adoption, though, is likely to be limited to higher income groups, leading to a relatively low proportion of 5G connections by 2023.

So, 5G will outpace 4G LTE in terms of network deployment and connection growth during each initial roll-out period. 5G is also benefiting from a stronger ecosystem. Telecom equipment vendors had been playing a critical role in accelerating 5G progress. Huawei and Ericsson were awarded the most commercial 5G contracts, Nokia was a bit behind. But by adding open interfaces to its telecom equipment, Nokia is seeking leadership in the open RAN ecosystem. ZTE is still in fourth place, with contracts mainly from Asia Pacific, Europe, and the Middle East, while Samsung already became a key 5G equipment partner for operators in South Korea, and America.

Exhibit 3: Huawei, Ericsson Lead in Commercial 5G Contracts

Despite the slow-down of 5G network construction in markets hit severely by the COVID-19 pandemic, primarily due to the constraints on construction activity, equipment and material supply, as well as the postponing of 5G spectrum auctions and standardization efforts, the development momentum of 5G is unlikely to be interrupted.

The pandemic has introduced significant impact to people’s lives. As people now spend more time at home, data traffic on operators’ networks increased significantly during the lockdown. Besides, the recent move towards physical distancing encourages industry players to exploit new opportunities like virtual meetings. At this point, the pandemic is likely to accelerate the 5G growth through the forecast period.

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Back in 2017, NB-IoT (Narrow Band Internet of Things) became a reality in China, closely following the readiness of 3GPP Release-13. The standardized low power wide area (LPWA) technology has distinctive advantages in aspects of battery life, chip cost, network capacity and coverage. Such characteristics promote the widespread adoption of NB-IoT in applications of remote control and monitoring.

Exhibit 1: NB-IoT – Best Solution for LPWA

Building on the success of pilot projects, NB-IoT quickly gained traction in public services. With the continued fiscal stimulus and policy support, the burgeoning NB-IoT applications, such as smart gas and water management, are becoming an integral component of smart city developments across China.

By the end of 2019, the cumulative NB-IoT connections surpassed 95 million, representing a net addition of nearly 62 million over 2018, with over 90% of the growth split between China Mobile and China Telecom. Leveraging the end-to-end NB-IoT solution, from eSIM chip to cellular module, from connection management platform OneLink to cloud platform OneNet, China Mobile had caught up with China Telecom, the pioneer of NB-IoT services in China, respectively enabling more than 40 million connections.

Exhibit 2: NB-IoT is Poised to Take off

Currently, the increasing adoption of NB-IoT in public and enterprise services is the main growth momentum, with more proven practices stepping into the large-scale commercialization. The installed base of NB-IoT-enabled smart water and gas metering, fire-fighting, bike tracking had each broken through the 10 million mark.

Thanks to the comprehensive improvements, the new generation of NB-IoT is compliant with 3GPP Release-14 and fits in more use cases, leveraging the faster uplink (150Kbps) and downlink (100Kbps) speed, deeper coverage (3dB enhanced), better mobility (80km/h), as well as the support of cell-based location.

NB-IoT is fast proliferating in diverse segments, such as smart street lighting, smart parking, intelligent manhole covers, smart home appliances, smart door locks, and assets tracking such as vehicles, personnel, pets, etc.

Along with the growing willingness to deploy cellular IoT in utilities, households and industries, as well as the legacy GSM connections gradually shifting to NB-IoT, the narrowband technology is becoming a significant growth point, next to LTE. The upward trend is poised to accelerate through the forecast period, with the penetration of NB-IoT reaching over 26% of cellular IoT connections in 2022. By then, the net addition enabled by NB-IoT will outnumber LTE new connections.

In July 2019, NB-IoT was officially submitted to ITU-R as the candidate technology standard of 5G mMTC (Massive Machine Type Communications), which means NB-IoT will become an integral part of IMT-2020 or 5G. In the new decade of the 2020s, Chinese operators will focus on NB-IoT for the massive low-speed, low-bandwidth connections, with LTE Cat.1 as a supplementary technology to address the voice-centric demands.

The post NB-IoT Is Poised to Lead the IoT Connection Growth in China appeared first on Counterpoint.

As of the end of October, the number of 5G phones released in 2019 exceeded 20. While leading Android brands have been keen on the adoption of 5G in their premium models, it is still challenging to bring down the price significantly. This is primarily due to limited 5G solutions.

However, as cheaper solutions emerge, we believe that the smartphone market in 2020 will benefit from the escalating competition among major platform providers, as well as the support of 5G connectivity in mid-end segments. Thanks to the availability of more affordable 5G smartphones, the global smartphone market is expected to get back on the growth track in the first half of 2020. The optimistic estimation by Counterpoint shows there will be more than 200 million 5G smartphones shipped in 2020, representing a mid-double-digit 5G penetration. We expect 5G sales in China to pick up from Q1, primarily driven by the new launches from Huawei and BBK group, while the sales boom in the US market will happen in Q3 with the launch of Apple 5G models.

Looking at the current scenario, Xiaomi, famous for its commitment to affordability, launched the cheapest 5G model in China at the end of September. The new flagship of Xiaomi’s number series, MI 9 Pro 5G, has a starting price of roughly US$520.

Exhibit 1: 5G enabled new models in 2019

According to the analysis of the 5G cost structure, we expect an addition of US$50 to implement the sub-6Ghz only by using a standalone 5G modem. However, costs can be reduced through the integration of a modem with the SoC (System on a Chip). Huawei’s Kirin 990 and Samsung’s Exynos 980 had taken a step ahead in this direction, and Qualcomm is expected to launch its first 5G SoC in the Snapdragon 700 family by the end of 2019. Besides, both Qualcomm, MediaTek plans to mass-produce respective 5G flagship platform SDM865, MTK6885, in Q1 2020.

In Q3, TSMC, the world’s leading 7nm chipset manufacturer, had seen the revenue contribution from 7nm node increasing to 27%, and the number is likely to further climb up to over 30%. Its production capacity of both 7nm and 7nm+ will be fully utilized due to the rising demand for 5G modem and chipsets. The promising prospect also reflects the explosive growth of the 5G user base in 2020.

Exhibit 2: 5G platform timeline in 2019 & 2020

Given the fragmented frequency allocation, we expect brands targeting North America and parts of European markets will customize designs with an external 5G model for mmWave, even though, most 5G models will resort to a 5G SoC for a cheaper sub-6Ghz only solution.

To sum up, we believe that 5G smartphones will be available in the mid-end price bands over the course of 2020. As a result, cheaper solutions for a next-generation offering will unlock consumer demand for upgrades of their smartphones.

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The growth is in parallel with the aggressive camera specification upgrades in smartphones, which has been the single largest end-market and accounted for nearly 70% of the overall CIS revenue in 2018. Our findings show that in 2018, each smartphone shipped featured 2.4 image sensors on average. By 2020, this number is expected to be over three.

Exhibit 1: Continuous Growth of Smartphone CIS

Even though the global smartphone market is still stagnant and expected to decline again in 2019, the trend of pursuing better image quality helped grow demand towards a multi-camera setup, super-high-resolution, and larger optical formats. This has resulted in continuous growth in the market value of CIS. During the first half of 2019, over US$5 billion worth of CIS were applied in smartphones.

Top CIS suppliers benefit from the growing market in different degree

Sony, the largest image sensor supplier, had renamed its former semiconductors segment to ‘Imaging & Sensing Solutions’. This segment accounted for over 20% of Sony’s total operating income during the quarter ending June 2019. This is interpreted as a move towards highlighting Sony’s CIS business. Due to the long-standing leadership in imaging technology and products, Sony’s CISs are widely applied in mid-range to high-end smartphone carrying a meaningful premium.

During Q2 2019, Sony raked in nearly 195 billion yen or over US$1.8 billion from image sensor sales. To consolidate its market leadership and address the increasing demand for high-quality image sensors, Sony is planning to invest approximately 700 billion yen (roughly US$6.5 billion) during the period of 2018~2020. It is also establishing new design centers across Europe.

Samsung LSI is catching up, with the announcement of KRW 133 trillion (roughly US$10.8 billion) investment plan for non-memory semiconductors in April. The company expects its CIS business, which stood around US$2.46 billion in terms of revenue, to copy its success in the memory market. Besides the increased adoption by Samsung smartphones, Samsung’s image sensor business is also benefiting from the growing business from major Chinese partners, such as Xiaomi, Vivo and OPPO.

To further step up the megapixels of the rear camera, Samsung had introduced two new 0.8μm pixel image sensors – 64MP ISOCELL Bright GW1 and 108MP ISOCELL Bright HMX (first adopted by Xiaomi’s concept model MIX Alpha) with industry’s highest resolution. Moreover, Samsung is ready to advance the pixel technology from the current 0.8μm to 0.7μm by mass-producing the first 0.7μm-size product – 43.7MP ISOCELL Slim GH1 at the end of 2019. All of these make Samsung a real challenger to Sony.

Exhibit 2: 2019 H1 Smartphone CIS Revenue Breakdown

During H1 2019, Sony and Samsung together occupied approximately 85% of sales revenue, indicating that the current CIS market for smartphones is highly consolidated. However, smaller players like OmniVision and SK Hynix are still capable of making revenue by providing differentiated products, which are primarily used in front cameras or multi-camera setups as the supplementary sensors. To increase presence in the fast-growing smartphone CIS market, OmniVison had introduced its first 48MP CIS featuring a 0.8µm pixel – OV48B, while SK Hynix plans to transform part of its DRAM facilities to expand the production of CIS.

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On September 4, Samsung LSI released its first 5G-integrated SoC, Exynos 980. The new chipset adopted the latest ARM architecture consisting of 2x cortex-A77 plus 6x cortex-A55. It can support up to 3.55Gbps downlink speed when combining 2CC LTE and 5G connectivity. Besides, the Exynos 980 also integrates the new generation of NPU with increased computing power.

In the quarter ended June, Samsung DS became the major business group for Samsung as it raked in over KRW 23.5 trillion (roughly US$ 20.3 billion). With a strong portfolio of products, the group is close behind Intel in the race for the semiconductor crown.

Exhibit 1: Samsung Exynos Platforms for 5G Commercialization

Source: Samsung Future Tech Forum

With the balanced performance and cost, Exynos 980, targeting both high-end and mid-range segments, is expected to significantly bring down the price of 5G smartphone launched in H1 2020. Besides the strong support of the Samsung A series, Exynos has also got a number of design wins from leading Chinese OEM like Vivo.

To address the increasing demand for high bandwidth in 5G era, Samsung will further boost the performance of mobile DRAM with a new concept memory called LPDDR5 (Low Power DDR5), as the successor of LPDDR4x. It delivers higher throughput, but also consumes less power. In terms of NAND flash, Samsung will extend the adoption of UFS3.0, which features twice the transfer speed of the previous UFS2.1.

As 5G is expected to be power-hungry, smartphone designers will benefit from adopting the flexible AMOLED to extend the battery life. The display not only features better power efficiency but also has a slimmer form-factor to save more space for a bigger battery.

Exhibit 2: Samsung Flexible AMOLED for 5G Design

Source: Samsung Future Tech Forum

Speaking of battery, Samsung SDI has developed a broad polymer cell lineup, with scalable capacity and high energy density. Clearly, Samsung is ready to address the various smart devices that will emerge in the 5G era.

Exhibit 3: Samsung Lithium-ion Cell Lineup for Smart Devices

Source: Samsung Future Tech Forum

Counterpoint believes that key players of the 5G supply chain have achieved significant progress in paving the way to large scale commercialization. With more 5G capable models set for launch in 2020 at a cheaper price, we expect the stagnant smartphone market will get fresh impetus. This can result in growth coming back to the smartphone market by H2 2020.

The post Samsung DS is Ready to Ride the 5G Wave appeared first on Counterpoint.

Already, we have seen OEMs switch to a multi-camera setup even in the lower price bands as well as bring in innovations such as enhanced zoom functionality and AI-enhanced images. The upcoming transition to 5G is set to bring a new momentum as OEMs work to enhance video-centric features. The tenfold increase in mobile bandwidth in the 5G era will develop the smartphone into a vehicle for high-quality video production rather than just a tool for video content consumption.

The trend of smartphone OEMs increasing the camera megapixels (MP) was clear in Q1 2019. According to Counterpoint Research’s data, smartphones with cameras of more than 12MP accounted for over 82% of the total shipments in Q1 2019.

During the quarter, the ratio of smartphones equipped with higher than 40MP rear camera reached nearly 3.6%, due to the increasing adoption of 48MP (0.8µm), which was applied in HONOR V20 and then widely used as the main camera within the triple camera setup.

The segment of 20~25MP also grew significantly, primarily driven by strong demand for the Samsung Galaxy A series, HONOR 10, HONOR 10i, and Huawei Nova 4e, and others equipped with a 24MP camera.

Exhibit 1: Smartphone Main (Rear) Camera Composition (%)

In spite of a slight decrease in market share, the ratio of the 12~13MP camera remained over 57%. The massive adoption of 12MP is attributable to the trend of pursuing high-quality image, leveraging the relatively larger pixel size (1.22/1.4/1.55µm).

However, the share of 16~18MP was flat as compared to the previous quarter, while the ratio of smartphones equipped with an 8MP(or less) camera has been decreasing.

In terms of OEMs leading the trend of higher camera megapixels, both Samsung and Huawei are at the forefront. At present, both brands have a broad portfolio, leading to a more mixed camera composition with the 12~13MP segment holding the most share. However, as Samsung is betting on A series for sales growth in developed markets, the ratio of 32MP(or more) is bound to occupy a considerable proportion from 2019 onwards.

On the contrary, OEMs like Apple, OPPO, and Vivo have a lean portfolio with 12/16/48MP applied in respective premium models. Currently, Apple highly replies on 12MP (1.4µm) as the main camera, while both OPPO and Vivo tend to differentiate design by using 13/16MP.

Xiaomi, a brand that is well known for value-for-money, also has a high proportion of devices using 12MP (with big pixel size) and 48MP for the rear camera.

Exhibit 2: Smartphone Main (Rear) Camera Composition by OEM (%), 2019 Q1

Given the growing demand for high-quality image and video, smartphone OEMs are keen on the adoption of higher resolution cameras. We expect to see continuous growth in the share of devices using cameras with 20MP or more. Samsung LSI just launched a new image sensor with resolution up to 64MP, aiming at the fall release cycle of smartphone flagships. This will further raise the level and quality of smartphone cameras, also resulting in an increased Bill of Materials (BoM) share.

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Back in 2013, China Mobile launched China’s first commercial 4G network. The high traffic introduced by 4G paved a path for the prosperity of the mobile internet. Six years later, Chinese operators are taking a leading role in 5G development globally. They are attaching a greater than ever importance to 5G which will bring in unprecedented experience in terms of ultra-fast speed, massive connection, higher reliability, and lower latency.

Exhibit 1: 5G Performance KPIs

Forthcoming 5G commercialization in major cities and nationwide network deployment progress

Right from the beginning, China has been active in 5G commercial preparation. The Ministry of Industry and Information Technology (MIIT) reserved 500MHz spectrum among 3.3GHz~3.6GHz, and 4.8GHz~5.0GHz, for 5G as early as June 2017. At the end of 2018, operators officially received 5G test bands. China Telecom and China Unicom, both received 100MHz spectrum in the mature C-band. Seen as a way to balance the market, China Mobile, holding over 931 million mobile users, was granted a less popular spectrum. It means extra efforts will be required to foster the supply chain for 2.6GHz and 4.9GHz. With the readiness of spectrum and the upcoming issue of 5G licenses (expectations are that on World Telecommunications Day, May 17, operators will get temporary 5G licenses), operators have accelerated the commercial process from all aspects.

There are 18 pilot cities embracing 5G trial networks in 2018. But already operators are planning to improve 5G coverage in major cities and extend the 5G network to a larger section of the population. For instance, China Unicom just unveiled its 5G new brand “5Gⁿ” and “7+33+N” network deployment plan in April,  aiming to carry out 5G contiguous coverage in seven key cities (i.e., Beijing, Shanghai, Guangzhou, Shenzhen, Nanjing, Hangzhou, Xiongan), hotspot coverage in 33 second-tier cities, and experiment service-oriented 5G private networks nationwide. This 5G rollout scheme reflects the unified approach taken by operators when it comes to the early deployment of 5G commercial networks. The focus of operators is on optimizing the eMBB experience in major cities and progressive exploration of industry applications.

Given the huge investment involved in 5G network construction, expected to cross RMB 1.3 trillion (roughly US$192 billion), there have been calls for co-building and co-sharing 5G network. Operators tend to improve investment returns and reduce the total cost of ownership (TCO) instead of blind expansion. Moreover, the demand for 5G is unlikely to explode in the short-term, partly due to the absence of core network capability for uRLLC and mMTC. At Counterpoint, we expect that 5G network in China will grow gradually, presenting a relatively slower growth curve compared to that of 4G, even though operators are racing for the title of being a 5G commercial pioneer.

Exhibit 2: 5G Developing Timetable in China

Between SA (Standalone) and NSA (Non-standalone) architecture, Chinese operators have set SA as their goal and direction for the long run. But they will take NSA as an interim solution to make 5G a reality in 2019.

Commercial 5G smartphone readiness

Smartphones with 5G capability will be critical to stimulate the early adoption of 5G networks among users. Fortunately, operators, smartphone makers, and chipset vendors have been in close collaboration and will launch commercial models from H2 2019. Huawei plans to launch at least three models – Mate 20X 5G in Q2, Mate X in July, and a new 5G flagship in Q4 – utilizing its in-house Balong 5000 modem which supports both SA and NSA. Other models, such as OPPO Reno(5G), Vivo NEX(5G), Xiaomi MIX3(5G), and ZTE Axon 10 Pro(5G), are based on Qualcomm X50, which only supports NSA.

Exhibit 3: 5G Smartphone Sales will Significantly Grow with Price Down

Given the high price of the first generation of 5G smartphones using a standalone modem system, the shipments are projected to be less than five million through 2019. However, sales will increase notably over time driven by hardware cost reduction, attractive tariff plans by operators, and the entry of Apple

Diversified use scenarios driven by 5G

Unlike its predecessors, the 5G use case is far beyond just the smartphone. In the near future, a majority or 80% of cellular connections will come from the communication between machines or machine to human. To fully exploit the potential of 5G, operators are investing heavily in service and application innovation across domains. These include initiating alliances, building open labs, and platforms. By providing a differentiated service in various scenarios such as cloud gaming, cloud VR, 4K/8K video streaming, home and industry automation, autonomous driving, and healthcare, 5G enables new business models with diversified revenue streams for operators.

Exhibit 4: The Real Value of 5G Relies on Differentiated Applications

In the 5G era, Chinese operators will redesign their network architecture leveraging SDN (Software Defined Network) and NFV (Network Function Virtualization) technologies. Through the cloudification of the core network and integrating 5G with AI, big data, IoT, cloud computing, and edge computing, operators along with industry partners will foster a broad and inclusive ecosystem. This will not only lay the foundation of telecommunication in the next decade but also shape the future of industrial internet.

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Back in 2012, Google launched the Changhua Taiwan center project, with an initial investment of US$300 million. The facility became operational at the end of 2013 and has been Google’s largest data center in Asia. It laid the ground for Google’s increasing computing needs across Asia Pacific (North Asia in particular). The region accounted for 15.4% of Alphabet’s, Google’s parent company, Q4 2018 revenue.

Taiwan remains a key technology investment destination. It offers access to industry-leading supply chain for smart hardware, a reservoir of talented people, and a conducive policy and taxation regime.

For Google, the importance of Taiwan also lies in the well-established supply chain and high-quality contract manufacturers. This facilitates the development and production of Google-branded hardware products, including the Pixel smartphones, Google Home (most of the Google Home devices were produced by Quanta) smart speakers, and Nest devices.

The US$1.1 billion acquisition of HTC’s smartphone team for Pixel program in September 2017 made Taiwan an important base for Google’s hardware R&D program. It already has over 2,000 employees in Taiwan and several more engineers will be recruited for the T-Park center. It will help Google further extend its hardware line-up beyond smartphones and help it develop 5G capable smart devices like wearables, AR/VR, and IoT devices.

Exhibit 1: Taiwan is Playing a Pivotal Role in Google’s Hardware Expansion Strategy

Google is at the heart of Taiwan’s AI (Artificial Intelligence) development and launched the “Intelligent Taiwan” program in April 2018. Benefiting from the favorable policy and the strong passion of young talent in Taiwan, the company has been recruiting AI engineers, investing in training, and acquiring AI talents from the grassroots. This is a part of Google’s goal of boosting its cloud business and also drive future talent for its data center in Taiwan. Google also works closely with multiple Taiwanese companies for data center components from servers to chipsets (TPU) manufactured by TSMC.

In all, Taiwan is a key cog in Google’s hardware supply chain across all its businesses from smartphone to IoT to cloud data centers. Given the trade war between China and the US, which casts a shadow on overseas investment in China, as well as Google’s minimal presence in China, Taiwan becomes crucial due to its proximity to China and Asia.

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Over the last few years, Chinese operators have been optimizing the allocation of subsidies, resulting in decreasing incentives to terminal devices. Data from Counterpoint’s Market Pulse service shows that China’s overall smartphone sales volume declined 11% year-on-year in 2018. As fewer smartphones were sold, the total handset subsidies in the period continued to decline.

However, given the complexity of the first generation 5G devices, operators are expected to provide more subsidies to offset the significant increase in Bill of Materials (BOM) cost of devices or up to US$50 net addition according to the latest analysis from Counterpoint Research.

In view of this, we expect the downward trend of subsidies will be reined in this year and slightly reversed due to more subsidies for 5G devices. Based on Counterpoint’s latest forecast on 5G smartphones, there will be around 5.7 million units shipped through 2019, and the sales volume will grow to 36.5 million in 2020, up 540% year-on-year. In the long run, the ramp-up curve of 5G will be more like that of 3G. likely leading to a steady growth of 5G terminal subsidies, but since Chinese operators are inclined to incentivize sales channels, improve service quality and consumption experience, and directly subsidize consumers, total handset subsidies are unlikely to recover to the pre-2014 levels, despite the advent of 5G.

Exhibit 1: Pure Handset Subsidies Turn Upside

While we expect subsidies to increase across all Chinese operators, the manner in which they deploy their resources will differ.

China Mobile will provide RMB 100 to 200 million subsidies to the first batch of 5G device providers. It also plans a 5G fund of over RMB 20 billion to promote 5G innovation and industry development. Meanwhile, China Mobile will carry on subsidizing 4G+ terminals in the early stage of 5G, since the ratio of 4G+ customers to total 4G customers is relatively low at only 34% at the end of 2018.

Exhibit 2: China Mobile Gives Back More Subsidies to Strategic Partners

China Unicom has been reducing handset subsidies. Its subsidy strategy carries distinct internet elements, with a total amount of RMB 21 billion being subsidized to facilitate the switching to 5G. While China Telecom will still focus on subsidizing all-modes handsets.

Beyond smartphones, Internet of Things (IoT) cellular modules have been another beneficiary of operator subsidy policy. For instance, China Telecom totally subsidized RMB 300 million or US$ 45 million through 2018, to bring down the overall cost of modules such as 4G and NB-IoT (Narrow Band-IoT). However, as the NB-IoT module prices fall between US$3~US$4, subsidies towards cellular modules are likely to decrease.

Exhibit 3: China Telecom Provided CNY 5.3 billion Subsidies in 2018

In addition, the switch to 5G also enables increased use of connected smart devices. Operators will provide dedicated subsidies to so-called generic intelligent devices including  VR/AR, wearable gadgets, connected notebook, HD STB, MIFI, etc., which will further diversify in the 5G era. This is also in accordance with the new implementing plan, jointly released by the National Development and Reform Commission, which aims to drive consumer upgrades.

The post Advent of 5G Will Increase Pressure of Subsidies on Chinese Operators appeared first on Counterpoint.

But with Apple issuing a profit warning, primarily due to weak performance in its second-largest market China, as well as a prevailing ban in China and Germany, the demand for Apple’s iPhones are likely to be affected this year. This will adversely affect TSMC, which is why the company has already found options to offset this decline.

The company’s flagship 7nm (nanometer) technology is being adopted at a fast pace across the communication and computer segments by companies such as Apple, Qualcomm, AMD, HiSilicon, NVIDIA and Xilinx. As a result, within two quarters of its launch, the 7nm has had the fastest revenue growth ever for TSMC. A similarly successful product line, the 10nm, took nearly three-quarters to reach the levels that the 7nm has achieved.

Exhibit 1: TSMC Advanced Process Technology Revenue Ramp First Year

The success of the 7nm helped TSMC to post record revenues of US$9.4 billion in Q4 2018, a 10.7% quarter-on-quarter increase and a 2% year-on-year increase. Gross margin, operating margin and net margin came in at 47.7%, 37% and 34.5%, only marginally lower than 50%, 39.2% and 35.8% in the same quarter last year. The drop was primarily due to an increase in investments in the 7nm and 5nm technologies.

This sets a good platform for TSMC’s future growth. It leads the market in wafer process node technology with its 7nm and with its upcoming 5nm technology, it is expected to maintain the lead. While the 7nm production ramped up only in the second half of 2018, it ended the year with a 9% contribution to TSMC’s total wafer revenue during the year. In Q4, the 7nm contributed to 23% of the total wafer revenue. While Q1 2019 might be affected by declining iPhone sales, orders from other clients may offset the situation in future.

As is evident from the Q4 2018 revenue growth rate for TSMC versus Apple devices, this Taiwanese company is diversifying its customer base for an advanced node by winning orders from Qualcomm and AMD through new launches using the 7nm technology. These launches include Qualcomm’s new mobile SoC flagship Snapdragon 855 paired X50 5G modem and AMD’s server processor Rome EPYC. HiSilicon’s extending product lines also inject momentum for TSMC’s future growth. Beyond the Kirin series, HiSilicon is working with TSMC on ARM-based server processor Kunpeng 920, Tiangang, Balong 5000 5G chipsets, AI processor Ascend 910/310 and more. Largely due to the 7nm, TSMC’s year-on-year growth rate surpassed its top clients in Q4.

Given the relatively soft end-market consumption and high inventory in the short-term, TSMC is pushing forward process upgrades and benefiting from its leadership position of 7nm to maintain a strong client base. This would help TSMC wade through short-term difficulties and emerge stronger.

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MediaTek is likely to wrap-up 2018 with flat revenue over the previous 2017 at about NT$235 billion or over US$7.6 billion. Declining sales in its mature product lineups covering e.g. feature phone, optical storage and digital TV are only partially offset by growth products. MediaTek has regained share in the mid-tier smartphone segments. But the smartphone market is weak – limiting the benefit of its share gains. Nevertheless, MediaTek has been able to improve its gross margin by around ~3 percentage points, primarily due to a better product mix.

MediaTek started its 2018 journey from a low base, considering the over 25% revenue slump in February. It rebounded from that low point due in part to its recovery in the smartphone business.

Concentrating on low-/mid-end segments, MediaTek’s smartphone business slightly recovered due to the growing demand from overseas markets

The global smartphone market declined in 2018 for the first time, primarily due to the further slowdown of saturated markets, especially in China falling over 7% and only partially offset by the volume increase from emerging markets, like India, Indonesia, Pakistan, etc..

Despite of the recession in mainland China, MediaTek was benefiting from the overseas expansion of major China clients, such as OPPO, Transsion, Huawei and Vivo, in which OPPO played a pivotal role and shipped more than 50 million MediaTek-powered smartphones (>40% in the Helio P60) as of the end of 3Q18. In addition, the removal of a sales ban for MediaTek-powered devices in India also spurred increased demand. Counterpoint expects more MediaTek powered smartphones will be sold in India as MediaTek’s core segments are well-aligned with India’s high volume market segments.

In 2018, MediaTek suspended its attempt to gain high-end share and readjusted its strategic focus to mid-tier smartphone launching the Helio P60, P70 and P90 respectively in February, October and December. By incorporating a dedicated AI Processing Unit (Mobile APU), MediaTek was attempting to create an advantage over competitors in the low-/mid-tier price segments. In addition, MediaTek has been striving to upgrade its network specifications and it will launch its first 5G baseband M70 in first half of 2019.

Smartphone and tablets remain the largest revenue source for MediaTek, likely accounting for around 40% of total revenue in 2018 based on Counterpoint’s AP Tracker service. Looking forward, the smartphone market in 2019 will see narrowing room for growth, resulting in escalating competition and the development of niche segment applications (like gaming phones), which casts a shadow on MediaTek’s efforts to raise the ASP of its smartphone chipsets.

MediaTek Targets “Growth Products” as New Revenue Momentums

Through active investment and acquisition, MediaTek has formed a comprehensive product portfolio, which is conducive to healthier development and make it more resistant to the soft mobile market. In 2018, sales revenue from “growth products” mainly covering IoT, power management IC, ASIC was expected to reach 35%~40%.

• Turn-key solutions for IoT applications: A broad range of connectivity technology (Wi-Fi/BT/GNSS/NFC, 2G/3G/NB-IoT, etc.) enable MediaTek tapping into emerging connected devices with growth potential, such as intelligent wearables, connected home and office appliances, utilities and more.
• The strong demand of AI voice assistant device (VAD), especially in China and North American markets, has more than doubled compared to that in 2017. Thanks to the top-tier players such Amazon, Google, Alibaba and Baidu, MediaTek was able to ship tens of millions of VAD chipsets.
• Power management ICs are expected to grow around 8% between 2017~2022, primarily driven by demand for electric vehicles, 5G communications, IoT and the related development of the so-called Industry 4.0.
• With silicon-proven ASIC solutions at 16nm and 7nm, MediaTek engaged with Alibaba, Microsoft, Sony and CISCO, and tapped into new business opportunities such as data center, gaming consoles, networking and wireless infrastructure.
• MediaTek has been steadily advancing automotive electronics, with its Autus platform focusing on Telematics, Infotainment, mmWave Radar and V-ADAS.

As the era of growth in the smartphone sector is coming to an end, MediaTek is leveraging its rich wireless and multimedia technologies to unlock the new troika, AI + IoT + 5G for sustainable growth.

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