As per the recent reports, the stability of the supply chain is critical for the successful development and manufacturing of products. While most international giants operate under the IDM model and have a complete industry chain, in China, Zowee Microelectronics has gradually shifted from Fabless to Fab-Lite and formed an entire ecosystem of R&D, design, wafer manufacturing, packaging, testing, and sales. However, most domestic RF chip manufacturers have adopted the Fabless model, which poses supply chain risks, especially with the widespread capacity shortage of major wafer factories in 2021. This led to contracts to guarantee production capacity, as was the case with Weijie Technology's and UMC.
The industry's slowdown, due to a decrease in demand, has led to a slowdown in 5G mMIMO deployment, affecting the demand for Qorvo's base stations as per recent reports. Consequently, the Chinese RF industry is shifting its strategy towards investing in high-end products and diversification. Although the RF industry has great potential for domestic substitution and growth, there is severe homogenization of RF chips, and competition in the middle and low-end market remains fierce.
Despite this, there is still a huge market opportunity for domestic RF companies in the RF front-end. With the advent of 5G and new technologies, innovation is the key to leading the RF front-end market. Domestic RF companies still need to work hard to develop critical capabilities such as high-performance filters and multiplexers, and reduce dependence on imports. As per the data provided by Yole, the RF front-end market is expected to grow at an annual compound rate of approximately 5.8% and reach 26.9 billion by 2028, indicating the immens poten tialof RF chips.
To sum up, the development of the RF industry relies on innovation, cost competition, and investment in diversification. The critical capabilities in high-performance filters and multiplexers need to be developed indigenously. The challenges that domestic RF manufacturers are currently facing can be overcome by formulating an effective long-term strategy while keeping up with the changing global technology trends.
