27 2 04

Portelligent has released data generated in its product teardown program which indicate that the first generation of UMTS handsets released in Europe exhibit extremely high system complexity and high estimated manufacturing costs.

In addition to the costs paid at auction by wireless service providers to license spectrum for UMTS systems, and the considerable investments required to install 3G network infrastructure, it will be imperative for handset makers to move to higher levels of system integration over time, and to lower manufacturing costs, in order to create an environment that makes 3G services attractive and profitable.

Product teardown analyses of three "first-wave" UMTS handsets introduced in Europe in mid-2003 -- the NEC e-606, Motorola A830, and Nokia 6650 -- reveal extremely high values on system-level metrics such as IC count, silicon die area, and total electronic component count, which are good predictors of overall manufacturing cost.

Data released publicly by Portelligent at the 3GSM World exhibition in Cannes, France, indicate that on these parameters, averages for the first generation of UMTS handsets dramatically exceed those for a representative 2.5G handset capable of data communications using the EDGE protocol.

Early UMTS handsets in Europe also exceed in system complexity cellular phones that implement 3G wireless communications protocols in other regions. According to Portelligent analyses, W-CDMA capable "FOMA" (Freedom of Mobile Multimedia Access) handsets introduced by NTT DoCoMo in the Japanese market in 2001-2002 had average IC counts of 32, and average component counts of 727 (versus 68 and 995 respectively for the three UMTS handsets). By contrast with UMTS, which specifies support for both W-CDMA and standard 2G GSM communications in a dual-mode approach, early FOMA handsets supported only W-CDMA-based communications.

A comparison of first-generation UMTS handsets with CDMA2000-protocol handsets introduced during the same period reveals even more dramatic differences in system complexity. If the average values for the NEC e-606, Motorola A830, and Nokia 6650 are compared with mid-range and high-end CDMA2000 handsets subjected to product teardown analysis by Portelligent, the UMTS handsets exceed the CDMA2000 average by 98 percent on IC count, 109 percent in component count, and fully 154 percent in aggregate silicon die size. Portelligent's system-level manufacturing cost estimates indicate that cost-of-goods sold for the first-generation UMTS handsets is twice that for representative mid-range and high-end CDMA2000 handsets.

Achieving higher levels of integration and simpler system designs in succeeding generations of UMTS handsets, in order to substantially reduce complexity and manufacturing costs, will be critical in making the 3G UMTS environment profitable, for both handset makers and wireless service providers. Of the three first-generation UMTS handsets analyzed by Portelligent, one -- the Nokia 6650 -- was found to be considerably more evolved on these dimensions than the other two, although in part this is explained by its more limited imaging capabilities.

Portelligent is currently examining the "second wave" of UMTS phones as these products are brought to market, and will perform full product teardown analyses of several to determine how much progress has been made toward more highly integrated, simpler, and less costly handsets.

Portelligent Inc., located in Austin, Texas, USA, offers reports and analyses that are generated through a rigorous "product-teardown" methodology to the electronics, wireless, semiconductor, and financial sectors. Portelligent is a spin-out of the MCC research consortium, where underlying analytical methods and cost models were developed.

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