RF and Microwaves in Asia: Technological and Economic Diversity

In the commercial and technological arena, Asia is the continent that elicits strong opinions and provokes debate. Is it an all-consuming predator with an insatiable appetite, sustained by low-cost mass production, intent on devouring the lion’s share of the market? Or is it the goose that will lay and incubate the golden egg of prosperity through technological development, the harnessing of an emerging academic and skills resource, and the exploitation of economic growth stimulated by a booming domestic market?

Of course, the reality lies somewhere midway between these two extremes and different perspectives of the region’s technological and commercial prosperity and development will no doubt be proffered at the 2007 Asia-Pacific Microwave Conference (APMC 2007), being held from 11 to 14 December, in Bangkok, Thailand. APMC 2007 is devoted to the research, development, and application of RF and microwave theory and techniques, and aims to continue and accelerate the momentum of research into the microwave sector, bringing together researchers from the Asia-Pacific region as well as other parts of the world to discuss and exchange views.

The host country, Thailand, is renowned as the Land of Smile, so what does Asia have to smile about in terms of technological innovation, developing markets and commercial success? How does it fit and interact with the global microwaves and RF community and what are its future prospects?

This article addresses these questions by considering the commercial and technological environment in which the Asian microwaves and RF industry is operating. It does not attempt to be a comprehensive market overview, but offers a sounding of the current status of academic and industrial development and identifies the main trends influencing it. It also provides a commercial perspective as executives from a small cross-section of companies actively participating in the Asian microwaves and RF industry contribute to the ‘company survey’.

Mobile/Telecommunications

The Asia-Pacific region is the largest mobile subscription market in the world. It is growing steadily, and according to research by Frost & Sullivan is envisaged to reach 1.14 billion subscribers by the end of this year. However, the bare figures mask the reality that the region is a complexity of individual countries at different stages of mobile technology innovation and commercial uptake.

Mature markets such as Japan, Hong Kong, South Korea and Taiwan are at the higher end of the technological spectrum where subscribers have access to state-of-the-art phones and the latest services that operators can provide. The result, however, is near saturation of mobile subscriptions.

Conversely, emerging markets such as China and India, which together account for a third of the world’s population, along with other heavily populated and developing countries such as Pakistan and Indonesia, will continue to see rapid growth in mobile subscriptions. Such markets with relatively low income per capita are witnessing network expansion and an increased demand for cheaper handsets. There is a booming market second hand device market in Indonesia in particular, with other similarly placed countries set to follow suit.

In India the mobile phone subscriber base has exceeded the 100 million mark according to In-Stat, who predict that this will more than double to 265.2 million by 2010. Significant contributory factors include an unpenetrated market, low tariff structure, operators investing in network expansion and greater affordability for a larger proportion of the population.

Technologically, 3G has made significant inroads in Asia, which now has the largest number of 3G mobile users worldwide, with In-Stat reporting over 130 million 3G users in the Asia-Pacific region in 2005.

With regards to 3G in China, the introduction of the homegrown TD-SCDMA system has been laboured to say the least. The government’s hesitancy has stalled what is a significant opportunity for China to establish a global communication standard, to lead the development of the technology and to own more intellectual property rights. Progress is now being made, though, with China Mobile constructing TD-SCDMA trial networks in Beijing and other key regions, and China Telecom and China Netcom also launching their TD-SCDMA network expansion programmes.

Wireless Technologies

Last year’s Microwaves in Asia Special Report highlighted that Asia has taken the lead in WiMAX development. That has continued, with the foundations for commercial fulfilment having been laid through telecommunication industry regulators giving the go-ahead and service providers viewing it as the perfect opportunity to generate broadband and wireless business. Trial and commercial deployments are ongoing. In fact, In-Stat reports that from a sparse base of 0.27 million in 2006, total subscribers in 16 Asia-Pacific countries are expected to reach 31.43 million by 2012, which will be worth $8 B.

A leader in WiMAX development in the region is South Korea, which, in 2006, was the first country to launch mobile WiMAX, or Wireless Broadband (WiBro), as it is known domestically. However, despite low cost full-scale network deployment, high data rates and defined QoS for both data and voice applications, take up has initially been disappointing due to limited network coverage and a deficit of user devices. This is being addressed and efforts are being made to grow business and move towards expansion.

Looking further into the future, WiMAX has great potential in China where it can expand the country’s market for fixed, portable and mobile broadband access. The fixed market will be important, but it is the mobile market where the long-term potential lies.

Asia’s dominance in the semiconductor market continues. According to the spring 2007 forecast of the World Semiconductor Trade Statistics (WSTS), the global semiconductor market is expected to grow 2.3 percent annually to $253.5 B in 2007 with Asia-Pacific exhibiting growth rates well above the global average.

Asia is the world’s semiconductor manufacturing hub that has capitalised on low labour costs to attract both domestic and global system manufacturers to set up base in the region. Supply is high but so too is demand as domestic semiconductor consumption increases to satisfy the population’s appetite for mobile handsets, computers and consumer electronic items. Consequently, Asia is now the largest semiconductor market in the world.

The key contributors to this consumer growth are China and India. However, their semiconductor industries are very different. China was a prime beneficiary of the market downturn in the early 2000s, which led to the closure of unprofitable plants in Europe and North America and accelerated migration to the Asia-Pacific. For chip suppliers to be able to be close to OEM, ODM and EMS customers made relocating and partnering attractive. It is invaluable for companies wanting to profit from the Chinese chip market to have a presence in the country. Also, the Chinese Government puts great store by developing advanced technology and continues to offer financial incentives for investment in the semiconductor industry.

Such government support is not so forthcoming in India, where the infrastructure is relatively poor, with the result that semiconductor manufacturing and fabrication does not have a strong base from which to develop. Where the country is strong and is making its presence felt in the global market is in semiconductor design. India now houses the design and development centres for many major integrated device manufacturers (IDM) and fabless companies.

Cost advantages, allied to readily available skilled manpower have enticed many IDMs to either outsource some of their design activities to third-party design firms in India or to set up their own design centres in the country. Much of that work is piecemeal at present, but natural progression is likely to see design companies moving towards providing the complete design process. These developments have prompted predictions that India’s IC design services sector will continue to grow at over 20 percent per year through 2010. However, the industry has recognised that to realise such predictions will mean continuing to provide the skilled manpower that is so vital to continued progression and it is therefore fostering close ties with academia.

The Asian semiconductor foundry industry continues to dominate the global market. It has benefited from migration from declining markets in other regions and being able to support a flourishing semiconductor manufacturing industry that itself is being buoyed by an increasing local consumer market.

Capacity has grown dramatically, especially in recent years with the ramping up of 300 mm fabs. The market has tended to be dominated by a number of large players offering advanced technology products while smaller companies have tended to rely on standard process technologies to produce generic semiconductor ICs. To advance process technologies and expand manufacturing capacity such companies need to carefully manage their resources and investments. Some are advancing by providing a mix of foundry-compatible processes along with well-supported specialized processes.

As far as different countries are concerned, Taiwan has the highest fab density worldwide and is the home of the leading two foundries, TSMC and UMC, while Japan has a long-standing foundry service industry dominated by IDMs that have their own in-house wafer fabs. South Korea is emerging as a serious rival to Taiwan and Japan. It has an established semiconductor manufacturing infrastructure, a wealth of technically skilled personnel, can offer a comprehensive range of testing and packaging services, and has a reputation for complying with trademark and copyright laws.

China has shown its intent to be a key player in the foundry industry with the emergence of the likes of SMIC and Grace Semiconductor, which have the potential to be competitive with the big names in the region. China has a huge untapped local market and while aggressive technological development and pricing ensure competitiveness it does not have a significant infrastructure and skills base. It is fettered by the restrictions that countries including Japan and the US put on the transfer of technology and equipment into China, and in order to attract foreign investment and business the country needs to address concerns over piracy.

Company Surveys

Technologically and economically the above briefly sets the context in which the Asian microwaves and RF industry is currently functioning, but what are the realities for companies developing, manufacturing and marketing new products in the region? To provide insight into current market conditions and technological development, a commercial perspective is offered via the ‘company survey’ of executives from companies representing a cross-section of industry. The format is generally a brief overview of the company’s activity, followed by comments on technological and market initiatives.

Japan

Orient Microwave Corp.

Since its foundation in 1983, the company has strived hard to improve its offering, develop its skills and contribute to society through the many products it has developed for microwave use. These now include various coaxial connectors, adaptors, cable assemblies, terminators, couplers, power dividers, attenuators, waveguide to coaxial adaptors, filters, antennas, switches, phase shifters, limiters, amplifiers, oscillators and circulators/isolators.

They are all made to suit specific customers’ needs, and are used extensively in modern, state-of-the-art electronic devices in the fields of space, aeronautics, radar, wireless communications, mobile communications and measuring. They also range from small orders through to mass-produced devices and from standard through to customized items.

Geographically the company has traditionally concentrated on its domestic Japanese market, but has also been active in other Asian countries and Oceania. The decision was recently taken to widen its reach when attending the 2007 MTT-S event in Hawaii, where it forged new relationships with North American and European businesses.

In breaking into new markets Orient proffers that Asian companies can capitalise on being rich in manpower, providing high quality products and offering competitive lead times at low prices. Also, utilising flexibility and endeavouring to meet all customer requirements, particularly for customised products, delivers a commercial edge.

In terms of technological innovation the company says that it is witnessing moves towards compact RF and circuit design on multi-layer PCBs and the development of mm-wave technology. With regards to microwave devices such as antennas, filters and mm-wave devices the company believes that higher frequencies, greater power, super low noise and broadband technology will stimulate the global microwaves and RF market in the future.

South Korea

Prewell

The company’s main activity is the design and assembly of RFIC and MMICs, particularly the development of high performance gallium arsenide integrated circuits for modern wireless telecommunications, telecommunication infrastructure and CATV applications. It takes advantage of state-of-the-art GaAs, InGaP/GaAs processes, utilizing HBT and PHEMT devices to develop new products.

Prewell is currently working to develop an RF amplifier with greater than 2 W of power and an ultra-wideband RF amplifier using HFET and PHEMT devices for telecommunication infrastructure. The company has also developed LNA, VCO and PLL modules for mobile infrastructure applications. These are all aimed at easing the task of the RF system designer, which together with quality and reliability are seen as the means for obtaining new customers and retaining existing ones.

Such customers are worldwide as the company strives to be a global business. It currently has one representative and 13 international distributors. A specific target market is close to home, in China, where it has a branch office to address the country’s expanding RF and CATV markets. Prewell believes it is important to be in contact and react to its distributors and customers in order to cater for different market requirements and provide the right products quickly at a competitive price.

The company proffers that, generally, Asian RF product manufacturers have the capability to produce new designs for new markets and have the manpower and experience to adapt to changing markets.

Technologically, Prewell is seeing significant activity in the development of WiMAX and CATV products using PHEMT and HFET, for which it hopes to provide a solution for the RF designer through the development of a mixer, digital controlled attenuator, regulator and operational amplifier.

The company sees the development of new technology and design skills as the means for delivering cheaper products, making design simpler and providing more powerful operating systems. It envisages higher frequency and ultra-wideband products fuelling the growth of the microwaves and RF industry in the future.

Taiwan

Daa-Sheen Technology

For over 20 years the company has been designing and manufacturing SMA, SMB, SMC, MMCX, MCX, N, BNC, TNC, FME, 7/16, 1.6/5.6, SMZ, SMP, MIMI UHF, VHF and CATV/satellite RF and microwave coaxial connectors and adaptors. As well as standard designs the company also offers customised designs in all sectors, including telecommunications, military, aerospace, automotive and medical. As well as developing its own products the company also manufactures under license if required. A key market is Europe, where Daa-Sheen is active in Germany, Holland, the UK, France, Switzerland, Italy, Belgium, Finland and Spain. Expansion into Eastern Europe has resulted in business in Poland and that has encouraged the company to target other European countries. Wider still it is active in the US, Australia, South America and Japan. The company likes to keep its operations under one roof, so it does not have partners but does have distributors.

The company attributes its success in so many regions to building close customer relationships and adapting to individual needs and specifications. This is particularly important for customised products and the company relies on customer feedback.

Daa-Sheen operates good production management with a flexible workforce. Therefore, it can offer quality and reliable products at an affordable price that gives its customers a competitive edge in their marketplace.

Commercially, the company believes that the East and West should work together to forge good working relationships. Technologically it feels that with the move towards miniaturised components there is the necessity to develop miniaturised connectors and adaptors too.

Thailand

Aerotek

Established in 1989, the company designs and manufactures passive microwave and RF ferrite components. Interestingly, the company has developed its design and production capability through technical consultation with the Thai-German Institute and the National Electronics and Computer Technology Centre (NECTEC).

Its main products are coaxial and drop-in type isolators and circulators covering the 80 MHz to 20 GHz frequency range. However, to meet the demand from customers needing to address higher operating frequencies it has recently added circulators and isolators for frequencies up to 26.5 GHz to its standard coaxial products. The company also caters for the demand for wideband and high power handling of circulators and isolators.

Aerotek exports its products worldwide, but its main customers are system providers and leading suppliers of test and measurement instruments in Europe and Japan, with India also a key outlet. In all three the company takes advantage of the well-established business relationships it has forged with leading distributors to handle its products for their local customers. The company also exports directly to other countries.

Geographical considerations are taken into account when developing new RF and microwave products. The main focus is to offer products that can fulfil customers’/end users’ requirements for quality and delivery worldwide, and although the company’s standard products are global it works closely with its sales representatives in each country and/or the end users to offer customized products, which can specifically meet their needs. Furthermore, the company is also looking for new opportunities to forge joint ventures or business partnerships with regards to licensing agreements.

Aerotek believes that in general Asian manufacturers offer design and production capabilities, allied to quality, reliability, and short and prompt delivery times. However, not only is Asian industry taking a more prominent role as suppliers to the RF and microwave industry, but its demand for new technologies in wireless applications is also a target market for European and US companies.

The company believes that the alliance between foreign and Asian companies will stimulate the growth of the RF and microwave industry worldwide because technologies transferred from foreign companies to their Asian partners will create economical production and global marketing. Sectors that could benefit from such alliances and which Aerotek identifies as having potential for technical development are WiMAX and high frequency and wideband applications.

Conclusion

Asia-Pacific continues to be a source of technological and commercial activity, epitomised by stark contrasts between individual countries that have developed and progressed at varying rates. The more established countries have been innovators and models for commercial development, while the emerging countries offer competition through low cost and large scale mass production. They also nurture booming home consumer markets eager to consume the latest technologies.

That hunger is particularly evident in the mobile communications market where subscriptions are large. However, the mature markets are reaching saturation, relying on new phone technology and services for growth, while emerging countries are seeing cheap handsets and network expansion as the conduits for growth.

Technologically 3G has made great strides with Asia now boasting the largest number of 3G mobile users worldwide. China’s TD-SCDMA system has not taken off as expected, but has the potential for growth. Asia has taken the lead in WiMAX development, where it is viewed as a means for generating broadband and wireless business. Trials and commercial development are up and running.

Asia remains the powerhouse of global semiconductor manufacturing and foundry services. By exploiting low labour costs it has been able to satisfy an increasing demand both globally and from growth economies. Established industries in Taiwan, Japan and South Korea continue to dominate, but face strong competition from China and India. The former is expanding its chip manufacture while India is using its skilled manpower to carve a niche in IC design.

The growth in the Asian market shows no sign of slowing down. Indigenous industry is at the forefront, but global players have also recognised the potential for gaining significant business through forging alliances and partnering agreements. All of which adds to the dynamism of an already diverse and complex region.

Acknowledgments

The author would like to thank the company executives who shared their in-depth knowledge and expertise. Their contributions have given a rare insight into the Asia-Pacific RF and microwave industry from those working at the forefront of the industry. Thanks also to the following companies for sharing their statistics on the market: WSTS (www.wsts.org) and In-Stat www.instat.com).