Tuesday, August 26, 2014

Overview of the tablet SoC market, with a focus on China

Price pressure on tablet application processor SoCs

When introduced in 2012, Alwinner's single-core A10 tablet SoC offered a higher level of integration than previous tablet application processors, enabling cheaper tablets, also helped by the fact the A10 was reported to be priced as low as $10, which was revolutionary at the time. However,  as of mid-2014, Allwinner, which is based in China, is ramping up its quad-core A33 tablet SoC and selling it for $4. The much lower chip price contrasts with the increased processing power of the new chip, illustrating both technological progress and intense competition (leading to commoditization) in the tablet processor space.

Rise of cellular data-enabled tablets

Part of the reason for the steep price decline is that traditional tablet application processor companies serving Chinese manufacturers such as Allwinner and Rockchip are being squeezed by the increasing worldwide demand for 3G (celullar)-enabled tablets, for which they cannot offer cost-effective solutions. The share of cellular network-enabled tablets has been rising quickly and currently represents between one quarter and one half of total unit shipments.

MediaTek takes advantage

This has allowed competitors that do have cost-effective integrated cellular modem technology, particularly Taiwan-based MediaTek, to take market share. MediaTek also generally has well-optimized, power-efficient solutions that can enhance the user experience (even for non-3G tablets, MediaTek chips are generally well optimized and very cost-effective).

MediaTek's product offerings for 3G-enabled tablets are mostly based on very similar chips used in smartphones. For example, the dual-core MT8312 corresponds to the MT6572 smartphone chip, while the quad-core MT8382 corresponds to the MT6582. In many cases MediaTek may be selling the same physical chip, just with a different number on it. It is also common practice in China to procure MediaTek smartphone chips for use in 3G tablets, for example the octa-core MT6592 is currently popular for use in tablets.

Even for WiFi-only tablets, MediaTek can offer more cost-effective solutions, because of its ability to integrate WiFi (and also Bluetooth and GPS) processing (at least the digital part) into the SoC, which reduces the cost of the external RF chip implementation and the cost of the PCB.

However, MediaTek is likely to be severely affected by the shortage of 28nm production capacity at TSMC on which it depends, limiting its ability to take more market share.

(Click on image to enlarge)

Chinese tablet SoC providers facing challenges

Allwinner has been in decline since their A10 family of single-core chips became uncompetitive in the first half of 2013. They had a moderate new product success with the A31/A31s in the first half of 2013, which was targeted at a higher-end segment with lower volume. Mainly because Allwinner's intended successor products for low-end tablets (such as the dual-core A20 and A23) encountered severe issues, Allwinner lost market share, having been passed by Rockchip at the end of 2013 and MediaTek as of Q2 2014. Allwinner hopes to recover some its market position with its new A33 chip.

Although Rockchip led the market in terms of unit market share since Q4 2013 up to at least Q2 2014, it is not immune to the price pressures on tablet processors. In particular, Rockchip has continued to rely fairly heavily on its more performance oriented RK3188(T) chip, which is not likely to be have a production cost that allows it to compete with, for example, the price quoted by Allwinner for the A33. Rockchip also has a low-end dual-core chip, the RK3168, that was delayed for quite a while until it started appearing in end devices last quarter. However, it is not likely a very cost-effective or power-efficient chip, and will immediately be pressured by Allwinner's A33 (apart from the pressure already exerted by MediaTek and other players due to the adoption of 3G connectivity). Part of Rockchip's problem may be that it is using the aging Cortex-A9 core and not the Cortex-A7 CPU core, which has become by far the most cost-effective and power-efficient CPU core for mobile applications. Rockchip may also have been affected by the quality/technology issues reported at its foundry partner GlobalFoundries this year, although the production of the RK3188 using 28nm HKMG seemed to go fairly smoothly starting from 2013. Nevertheless, Rockchip has continued to ship high volumes of the RK3188 and lower end chips, all of which use Cortex-A9 cores.

Additionally, over the last year both Rockchip and Allwinner seem to have diverted a lot of attention to ambitious higher-end products (RK3288 and A80, respectively) that have proven to be a challenge to bring to market in working order, apart from being unsuitable for most of the tablet market due to high power consumption. At the moment neither product appears to have much potential for success because of unsuitability for the tablet market.

Other Chinese players

Other players continue to be active in the Chinese tablet processor market. Actions Semiconductor, which has a relatively long history and was in the past a successful supplier of MP3 player chips, when it incubated the engineers that would later start Allwinner, has been competing at the bottom of the tablet market with generally lower-performing chips. Although their ATM7029 was the first cost-effective quad-core processor for Chinese tablets in 2013, it uses low-performance Cortex-A5 cores, which created controversy as Actions for a long time maintained that it was using Cortex A9 (or later "Cortex A9-class") cores in this chip, clearly at odds with performance and closer examination of the product, and Actions went as far as modifying the kernel/OS to cover their tracks. Nevertheless, the ATM7029 sold in fairly high volume, and later Actions replaced the Vivante GPU with a somewhat less problematic PowerVR SGX540 in their ATM7029B, and no longer seems to deny the presence of Cortex-A5 cores. However, their new product, the ATM7039, still hasn't quite appeared on the market. The reduced chip prices are likely to make it difficult for Actions to make a profit on their chips.

There are also additional Chinese companies with expertise in the smartphone space, such as Spreadtrum (long established as supplying significant volumes of mobile phone chipsets) and Leadcore Technology (an emerging player) that are targeting the tablet space (especially cellular-enabled tablets). Possessing a clear advantage over traditional players such as Rockchip and Allwinner, they may put additional pressure on them.

Intel renews efforts to penetrate Chinese tablets

One additional development is the significant investments Intel is making to gain a foothold in the mobile space. Using a "contra-revenue" strategy, Intel is targeting tablets with subsidized Atom chip offerings to gain market share. Although Intel's products, thanks to an advanced fabrication process, generally have excellent performance (both CPU and GPU, as well as battery life), the Android software ecosystem is still more geared towards ARM-based platforms, with potential incompatibilities. Although earlier expectations that Intel would heavily target the low-cost white-box tablet market in China (affecting the above-mentioned companies) have not quite come true yet, Intel has already gained design wins for more lucrative platforms for brand name tablets in China as well as Taiwan (the likes of Lenovo, Asus and Acer). At this point, market share figures do not present evidence that Intel is already bulldozing its way into low-cost Chinese tablets.

However, Intel has recently increased its focus on Chinese white-box tablet manufacturers, striving to ship a total of 25 million tablet processors in the second half of 2014. Design wins based on new, more cost-effective platforms, such as the quad-core Atom Z3735 series, which includes models with a more economical 32-bit DRAM interface and other cost improvements, are expected to be in production by October. Intel will also push its SoFIA platform towards the end of 2014, extending its offerings for 3G-enabled tablets and smartphones. Seperately, Intel also has an agreement with Rockchip involving Rockchip's integration of an Atom processor and Intel 3G modem for a SoC product targeting the tablet space in 2015.

High-end and captive players: Qualcomm, Samsung, and Apple

Qualcomm, the dominant provider of smartphone SoCs for mid to high-end platforms, also targets tablets, and has recently been used in models from major brands such as Samsung, Sony and Amazon, especially 4G cellular data-enabled models. Additionally, both its Snapdragon 800 and 801 series include SoC versions without cellular modems, specifically targeting WiFi-only tablets.

Samsung has also been developing tablet processors for some time. Over the years, its Exynos SoCs have been used several of its own tablet models, and Samsung has a history of offering selected models (such as Exynos 4412 and the recent Exynos 5260) to Chinese manufacturers.

Finally, Apple has been using custom-designed application processors in its iPads, as well as iPhones, for some time. Generally these have been high-end designs, targeting performance more than lower chip production cost, because the margins on Apple devices are of such magnitude that a higher cost chip has little influence. Up until Apple's A7 used in the iPhone 5S, Apple concentrated on application processors manufactured at Samsung, with the cellular modem functionality typically provided by a seperate Qualcomm baseband/RF chipset. As of 2014, Apple has been ramping its new Apple A8 processor at TSMC using a leading 20nm process, and there has been speculation that this new SoC probably contains a baseband modem as well.

(Click on image to enlarge)

Sources: EE Times, DigiTimes (1H 2013 shipments), DigiTimes (Q4 2013 shipments), DigiTimes (Q1 2014 shipments), DigiTimes (Q2 2014 shipments), DigiTimes (MediaTek benefits from move to cellular functions in tablets)MEPTEC (integration of WiFi/Bluetooth/GPS reduces cost), DigiTimes (Intel push in 2H 2014), AnandTech (Intel SoFIA platform)

Updated September 19, 2014.

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