RF Power Semiconductors Have Just Become a More Complex Business

Radio Frequency (RF) power semiconductors, especially for wireless infrastructure, have always been a difficult business. Constant technical issues and the introduction of new technology, intense competition, and cyclical business environments keep things in a quasi-state of perpetual flux. Coupling this with the fact that it is still an “expert-based business” that ships hundreds of millions of parts per year does not help.

As 4G/Long-Term Evolution (LTE) infrastructure is built out, this market segment will flatten out, and perhaps even decline a bit. This has caused most vendors in this space to search out markets outside of wireless basestation systems. This is no easy task; collectively, the other segments of RF power under 4 Gigahertz (GHz) and >3 Watts (W) amount to about half of the current wireless and mobile infrastructure business.

Added to this mix over the last year or so are new drivers that can potentially have serious effects on the RF power semiconductor marketplace. These new forces lie outside those mentioned above.

Five principal potential hurdles bear careful watching:

1. The tariff/trade situation between the United States and the European Union (EU) and between the United States and China. This could make a difficult situation even more so. Currently, it is uncertain exactly what will be on the tariff lists of both the United States and the trading partners beyond what we already know. If carried to extremes, this has the potential to drastically affect the RF power business.
2. Investment barriers that may crop up because of the trade problem mentioned above could seriously distort the normal operation of this market. The worldwide technical industry picture is internationally connected now. Markets in a modern context are not monolithic and they need to operate in an interconnected and synergistic fashion.
3. Transfer of technology from the United States to other nations, not only China, will no longer be the easy ride it once was. This will certainly be the case with Gallium Nitride (GaN) technology and anything related to radar or other pulsed operations. Technology transfer is a problematic issue and is intertwined with the trade/tariff situation. It can no longer be considered independently.
4. U.S. restrictions on the Chinese company ZTE are still somewhat unresolved. While a tentative agreement was reached, resistance within the U.S. Congress has added uncertainty.
5. Large-volume introduction of 5G New Radio (NR) systems is still several years out. The hopeful expectation is that these new deployments will take up the decline of 4G/LTE infrastructure.

Individually, these five impediments are serious enough, but when looked at in total, careful business practices will need to be the order of the day.

Given the complexity of the situation, the approach to the RF power semiconductor market will need to be handled more carefully. ABI Research recommends a cautious and conservative approach for the remainder of 2018. To expand the discussion of the points above:

• Carefully review potential and actual trade tariffs that are on the horizon. Many of these are buried in the fine print of tariff lists. For example, the list of potential EU tariffs on U.S. products has a 50% tariff on microwave amplifiers. This could apply to RF power semiconductors, too, but the details have not been fleshed out yet.
• Any operating agreements or foreign investments, in both directions, will need to be fully vetted for internal/external modifying forces before proceeding. In some cases, it may make more sense to delay these international agreements until the trade situation quiets down.
• When selling or transferring potentially sensitive technology offshore, make sure that compliance with export restrictions has been carefully reviewed. It is likely that regulators will review these with higher scrutiny.
• Be aware of current acquisitions, consolidation, and technical agreements that could reshape the industry. Two specific examples of each, respectively, are Wolfspeed’s (Cree) purchase of the RF power business of Infineon, and the GaN on Silicon technical agreement between STMicroelectronics and MACOM. Additionally, Chinese regulators have recently not granted approval for the Qualcomm/NXP deal.

This sounds a bit alarmist, but these more complex market conditions can be managed if done step-by-step and thoughtfully, while keeping the above points in mind.

What is the expectation for RF power semiconductors for 2H 2018? Although a slight uptick looked like it was in the cards, the new external forces at work could drive things flat for the remainder of the year.

This topic is discussed in detail in ABI Research’s recent RF Power Semiconductor Devices for Mobile Wireless Infrastructure: Device Analysis for Macro Base Stations, Remote Radio Heads and Active Antennas report (MD-AMPD-18) and in a companion narrative in application note format, AN-4911.