For years, mobile-phone makers have been adding features to their products to expand their appeal. Yet with hopes for wireless subscriber growth now pinned on developing nations with large populations of low-income consumers, mobile-phone makers also are developing and offering ultra-low-cost handsets (ULCHs).
These inexpensive devices have minimal feature sets. But to meet their strict cost targets, ULCHs cannot simply be strippeddown versions of existing phones. Instead, they must be new designs based on single-chip solutions.
From 2006 through 2010, 71% of the world's new mobile-phone service subscribers will be from developing nations. ULCH initiatives seek to serve this growing base of subscribers with phones that have a bill of materials (BOM) cost of as little as $20, compared to the industry average of about $40.
Single-chip solutions appear to be the answer for bringing down the cost of the core ICs, enabling ULCH handsets. These system-ona-chip devices integrate the RF transceiver, analog baseband, and digital baseband onto a single IC. In some cases, they also fully integrate the power function.
A number of semiconductor providers have developed or are developing single-chip solutions for ULCHs. Single-chip phones reduce phone BOM costs by cutting silicon die area, packaging cost, component count, pc-board area and complexity, and testing time.
The total BOM for an ULCH based on a single-chip solution is about $31.97, compared to $38 for a discrete design—that's a 15% reduction. But the BOM cost of an ULCH handset will be reduced to almost $25 by 2010, putting these phones close to their $20 target.