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Apple sending a wake-up call to the US semiconductor industry.

Back in April 2021, Apple committed $430B in US investments over five years, raising by 20 percent its previous 2018 investment plan. More specifically, the company reported tens of billions of dollars for next-generation silicon development and 5G innovations across nine US states.

The recent multibillion-dollar deal with Broadcom is a major milestone in this plan. It is officially meant to enable Broadcom to continue to invest in its Fort Collins’ plant where FBAR filters are manufactured. FBAR is a key technology for Broadcom; however, it’s not the only one required for delivering RF front-end components to its North American customer. Besides FBAR filters, power amplifiers made using compound semiconductors, silicon-based RF switches, and low noise amplifiers (RFSOI or CMOS) must be fitted into a compact package, forming a complete system. We estimate 50% of Broadcom’s module value is from FBAR filters, the other half being distributed between compound semiconductors, silicon-based components, and the package itself. Broadcom is, of course, mastering and designing these technologies but is outsourcing most of its operations to Taiwanese foundries for compound semiconductors and silicon, and the system in package manufacturing is left to OSAT companies in Asia. The deal will not likely affect this business model but will help Broadcom to remain competitive with state-of-the-art technology and good yield, thus reasonable cost. The challenge for Broadcom in remaining ahead of the curve is to continue absorbing the complexity brought by the introduction of 3GPP features while offering a more compact front-end module every new generation. This requires innovation not only in the FBAR filters themselves but also in the system design, another area where Broadcom is strong.

Multiple component blocks are required to support the many radios in mobile applications (5G, WiFi6 (6E-7), BT, GNSS, UWB, and so on). A simplified architecture is shown in fig1.

hot-topic-2023-apple-sending-a-wake-up-call-to-the-us-semiconductor-Simplified radio architecture in mobile - 2022

It spans multiple semiconductor domains, from digital and analog (also known as RF in the industry) to the RF front end. Platform makers such as Qualcomm, MediaTek, and Samsung are leading in the digital cellular baseband and analog worlds for now. Apple is reportedly working on its independence in this domain, developing its in-house platform, leveraging the heritage from Intel’s modem business unit. Apple’s still-to-come in-house cellular modem might be incorporated into its next-generation application processor beyond 2024-2025. On UWB, Apple is already there and has had its own System on Chip since the feature was introduced in the iPhone 11. In Wi-Fi, Broadcom comes as a leading System on Chip player along with the other cellular platform players. It’s not clear yet if Apple will get there too, but it would clearly be a huge loss for Broadcom if it materialized. These digital and analog functions are based on advanced silicon technologies leveraging leading flagship foundry offerings from TSMC or Samsung. Both foundries committed to investing in plants across the US: Samsung with a $17B plant in Texas state and likely much more to come, TSMC with $40B for two plants in Arizona state.

The picture for the RF front-end block is entirely different. Since this block is responsible for amplifying radio signals in the uplink and downlink, switching it to the appropriate antennas and filtering out unwanted signals, there is a need for multiple semiconductor technologies, as mentioned before. The number of radio signal paths is proliferating in mobile apps while the space allocated for RFFE is shrinking, so the need for innovative and specific packaging tech along with feature integration becomes critical. These challenges are tackled by a number of companies – including Broadcom, which has a significant market share – but also Qualcomm, Qorvo, Skyworks, and Murata, as shown in fig2.

hot-topic-2023-apple-sending-a-wake-up-call-to-the-us-semiconductor 2022 VS. 2021 RF front-end market share (%)

Four of these top five are involved in Apple’s RF front-end sub-7 GHz supply chain, with Qualcomm the one missing. Since Apple obviously needs multiple sources of components to secure the supply and optimize its procurements, we don’t expect Broadcom to be the sole supported company. The few billions of dollars left in the overall envelope might be awarded to the other leading RF front-end makers. Indeed, looking at the locations where Apple announced investments would be made, they appear to be where key manufacturing sites and design centers from Qorvo, Skyworks, and Murata (pSemi) are located. There are also likely some Tier 2s around these hubs that should receive some support. Another very likely candidate is GlobalFoundries, one of the leading RF front-end specialty silicon foundries, which recently acquired a vast tract of land in Malta, N.Y., preparing to service a growing market demand for US-based chips. Such foundries are key to the RF front-end ecosystem as shown on Fig3.

hot-topic-2023-apple-sending-a-wake-up-call-to-the-us-semiconductor- 2022 leading RF front end players by business model

At Yole Group, we are closely monitoring this market, continuously gauging the associated stakes.
Check out our reports for more information and stay tuned.

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