Insiders tell you whether the Bluetooth BLE market is "red" or "blue"

5.4 billion, this is the shipment volume of Bluetooth devices that will be reached in 2023, basically reaching the level of one for every person on the planet. Among them, the annual shipment volume of Bluetooth Low Energy (BLE) devices will exceed 1.6 billion units, and achieve a compound annual growth rate (CAGR) of 27% between 2018 and 2023. Smart homes, beacons and asset tracking, and emerging Internet of Things (IoT) applications provide a huge boost, and the emergence of new applications such as BLE audio will also provide greater market opportunities.

In the BLE market, foreign giants have been planning for many years, and emerging domestic chip forces are also trying their best to catch up. With so many competitors vying for the top spot, who will be the winner?

The Chosen One

Smart door locks, shared bicycles, remote controls, bracelets, what is the current largest market for BLE chips?

"That must be a bracelet product." Li Hongyu, founder of Hefei Lianrui Microelectronics, said without hesitation. Since the Xiaomi bracelet detonated the market, the bracelet market has been booming. According to statistics, in the first quarter of 2019, the shipment volume of Xiaomi bracelets alone reached 5.3 million units. Xiang Jianjun, founder of Chengdu Ruichengxinwei, told reporters: "The wearable market represented by bracelets has grown over the past four or five years, and the monthly peak of BLE chip usage is close to 20kk." This number is a very high level even among all types of chips.

The obvious reason why bracelets prefer BLE is low power consumption. The latest BLE chip has a sleep current of nA level and an operating current of mA level, which will bring ultra-long battery life to the bracelet.

In other indicators, BLE upgraded to version 5.1 is also very competitive. In terms of transmission rate, BLE reaches 2Mbps and can do transparent transmission. Although WiFi has a high rate, its transmission capacity for control applications is not strong. Zigbee, NB-IoT, Lora, and Sigfox are all at around 250Kbps, which is not on the same level. In terms of transmission distance, BLE can currently reach 50m indoors, which is better than Wi-Fi at high transmission power. In terms of networking capabilities, BLE's mesh networking can theoretically reach 65,000 nodes, and can reach thousands of nodes in actual measurements. Moreover, the characteristic of mesh networks is that nodes are equal, and the collection and control within the network can be digested within the network.

Even in the face of its senior brother Bluetooth Classic, BLE still has advantages in power consumption, speed, and cost. Therefore, starting from Bluetooth 4.0, the Bluetooth Alliance has continuously added various attributes to BLE. Unconsciously, BLE has become a new upstart in short-range wireless communication technology.

Red Ocean or Blue Ocean?

If you search for Bluetooth low energy, you will see many manufacturers and products, so is this market already a red ocean?

"The BLE market is definitely not a red ocean." Li Hongyu denied this statement, but he also said that the market is divided. "Foreign chips have high prices due to their performance advantages, while domestic chips are at the level of low-price competition."

Xiang Jianjun agrees with this view: "With more and more players in the BLE market, chip prices have fallen year by year, which often gives people the impression that the BLE market is a red ocean."

According to him, at this stage, domestic BLE chips are mainly concentrated in the mid- and low-end wearable market, with fierce price wars and a trend of a red ocean market; while the high-end wearable market, such as brand terminal manufacturers Xiaomi, Huawei and Lexin, is currently occupied by foreign companies Nordic and Dialog. Their new BLE chips are priced at more than US$1, with good shipments and gross profit margins, which can be called the Bluetooth market.

"Strictly speaking, most of the BLE market currently belongs to the blue ocean market with high growth and new applications, and a few slow-growing homogeneous competition markets are already close to the red ocean market," Xiang Jianjun concluded.

In addition to wearable devices, many industries have also been swept by the BLE whirlwind. The first is the automotive industry. Since 2018, up to 80% of new vehicles have been equipped with Bluetooth connection functions, and it has become a trend to equip car keys with BLE. The second is smart lighting, which uses BLE technology and adopts MESH networking. You only need to install an APP on your smartphone to realize the smart networking of lights. In addition, smart door locks, which are very popular in urban and rural areas of my country, have BLE as standard. Even in some traditional Bluetooth markets, such as PC peripherals, BLE has begun to replace classic Bluetooth because it has lower power consumption and faster and more convenient pairing and connection.

From the perspective of future growth space, BLE is definitely a blue ocean.

Low prices aren’t all bad

Even though it is not a red ocean market, the situation of domestic BLE chips is one where challenges and opportunities coexist.

Li Hongyu told reporters that the domestic BLE chip market share is only 20%-30%, and international manufacturers such as Nordic, Dialog, TI, Cypress, and CSR (acquired by Qualcomm) occupy a dominant position.

This is also related to the fact that domestic manufacturers started late in this direction. In 2016, there were three BLE companies in China that started mass production and shipment, namely Tailing Microelectronics, Broadcom Integrated and Chengdu Shengxin Micro (formerly Beijing Shengyuanda). In 2017, Beijing Angrui Micro (formerly Beijing Hantianxia) and Juwei were added. The monthly shipments of these five companies are currently in the kk level, which is an important threshold. Subsequently, new manufacturers such as Hefei Lianrui Micro, Juxin, Fengjia Micro, and Fu Ruikun joined.

Domestic manufacturers currently do not have the absolute strength to challenge international giants. In terms of revenue in 2018, Nordic reached 262 million US dollars, while the top three domestic manufacturers combined had 510 million yuan. The gap is obvious.

International manufacturers are taking the mid-to-high-end route, and the average price of BLE chips is rising year by year. Domestic manufacturers are constantly reducing prices due to the increasing number of entrants. At present, the average price of domestic BLE SoC chips is US$0.45, and the price range covers US$0.3 to US$0.8. If you want to expand to modules, a low-end simple universal model Bluetooth transparent transmission module can be sold for 4 yuan, and a customized module can be sold for more than ten yuan or even dozens of yuan.

The impact of things always has both good and bad sides. The reduction in chip prices also has a beneficial side. "While reducing the gross profit margin of chip manufacturers, it can also drive a larger application market and attract more customers to use Bluetooth chips, which in turn reduces the cost of chip manufacturers, increases the overall gross profit of the industry, and promotes the rapid development of the Internet of Things." Xiang Jianjun believes.

Interestingly, international manufacturers have also started to think about low-price ranges. Dialog recently released a BLE chip that costs only $0.5, which is intended to cover low-cost remote controls, PC accessories, toys, food/drug cold chain monitoring, hospital, factory, distribution center item tracking, and replace active RFID.

"This chip may have a gross profit of about 50%." Li Hongyu has made an estimate and believes that the product positioning of this chip is very accurate. However, this chip will not have a big impact on domestic manufacturers. "This chip is mainly aimed at the long-tail market, and the usage in a single field is not very large. Domestic chips are still rarely focused." Li Hongyu said.

It's low power consumption, not low performance

BLE's lower cost does not mean that performance has to be compromised. Like other wireless protocols, BLE is the foundation of IoT. According to Mark de Clercq, director of Dialog Semiconductor's Low Power Connectivity Division, "The entire Internet of Things is a pyramid. The number of devices at the bottom of the pyramid will be large. The higher you go, the higher the cost will be. The smaller the number of devices used, the higher the cost." BLE serves a large number of tower-based devices. If the tower base is unstable, the tower body will be in danger. The BLE chip must have low power consumption and good performance.

The reason why most domestic BLE chips are difficult to enter the vision of domestic bracelet manufacturers is because they are not up to standard in terms of power consumption. According to insiders, in 2018, a domestic brand bracelet manufacturer wanted to find a domestic BLE chip to replace the products of foreign manufacturers. After much effort, they found a domestic chip that met the requirements. This can also be seen from the disassembly reports of many bracelets. The main products of well-known brands all use chips from Dialog or Nordic. The power consumption is too high to be introduced into wearable products that are very sensitive to this. This is also the main reason why the wearable market with a consumption of more than 10kk is mainly occupied by foreign capital.

Another reason is that domestic BLE chips are not stable enough. Specifically, the MCU integrated in the chip often freezes and restarts, the connection is unstable and easy to drop the line, and the compatibility is poor. Xiang Jianjun believes that these problems are clearly proportional to the mass production time of BLE manufacturers. He said: "Generally speaking, it takes at least half a year to polish a BLE chip from the so-called mass production of the chip manufacturer to the actual large-scale shipment to customers. International manufacturers started mass production early, have been polished in the market for a long time, and have performed well, while domestic manufacturers, especially new mass production manufacturers, are slightly insufficient because of their late mass production time."

It is easy to pass the threshold, but it is difficult to master it. Li Hongyu said that the BLE chip is similar to the current MCU. It is easy to develop, but it is difficult to make it precise. The BLE chip can be understood as a BLE RF plus an MCU chip. The core RF part needs experienced engineers to develop, and China is relatively lacking in this area. At the same time, the MCU part of domestic chips is also far behind the international manufacturers in terms of user optimization.

In terms of technical support, BLE manufacturers also rely on a large number of FAE personnel to implement. For a large number of small and medium-sized customers, domestic manufacturers are often absent due to the lack of FAE personnel, and there is also a lack of rich documentation and good technical training, which leads to customers generally believing that domestic BLE manufacturers have poor technical support. This is also something that domestic manufacturers should pay attention to.

The heart of a chip

Modern chip design is a bit like assembling Lego. Purchasing a large number of ready-made IPs saves a lot of energy for design companies, and BLE chip design is no exception. Therefore, the level of domestic BLE IP also determines the performance of BLE chips.

Xiang Jianjun told reporters that in the domestic BLE IP market, digital baseband and modem are usually provided by foreign IP manufacturer CEVA. Most domestic BLE manufacturers use CEVA's digital baseband IP, and a small number of manufacturers develop digital baseband IP on their own or use digital baseband IP from other companies.

The situation is quite different in the field of RF IP. Previously, there were no dedicated IP manufacturers in China, and they were mainly developed by chip manufacturers themselves. Given the high threshold for RF development, each BLE manufacturer has made huge investments. Xiang Jianjun said: "Generally speaking, the investment in developing a BLE chip, from project launch to mass production and shipment, is generally between 20 million and 50 million RMB, and the time is generally 3 years or more. In addition, RF has high requirements for technical accumulation, and the performance, power consumption, and cost of each company's RF vary greatly. A lot of manpower and material resources are spent without necessarily obtaining good results."

However, this situation may be about to change. Ruichengxin recently launched a BLE RF IP, which has significant advantages in performance, power consumption and cost, allowing users to launch products quickly and well to occupy the market.

According to the information released, the RF part of this IP is very small, less than 0.5mm2; at the same time, the power consumption is lower, the RF receiving power consumption is 6mW, and the RF transmitting power consumption is 9mW when the output is 0dBm. In addition, Ruichengxin can flexibly customize the IP on any process platform according to customer needs, making customers' products more differentiated. 

In terms of overall design, the level of domestic chips is improving very fast. Taking the $0.5 chip as an example, "the chip we are about to mass-produce will surpass it," Li Hongyu said confidently.

walk my own path

For domestic manufacturers, if they want to break out of the vicious cycle of BLE low-price competition, they need to explore more ideas.

Xiang Jianjun summarized three feasible development directions:

1. Go to extremely low cost . The low-end market is the foundation of domestic chips, and it is not shameful to make low-end chips. On the contrary, only through continuous technological innovation and process evolution can we achieve extremely low costs. With the year-on-year growth of the BLE market, the low-end market at the bottom of the pyramid has the largest growth in usage and accounts for the largest proportion. For domestic BLE manufacturers, especially start-ups, when funds are insufficient, the most realistic way is to quickly launch products in the low-end market to get a share.

Second, go high-end. With strong financial strength or sufficient accumulation, aim high, polish the product, target the high-end market with high gross profit margin, and compete head-on with international manufacturers. Because high-end customers have higher requirements for products, this approach will be difficult in the early stages of research and development and promotion, but once successfully introduced, the market will be more stable and the gross profit margin will be higher.

3. Towards differentiation . BLE SoC, also known as wireless MCU, has the market attributes of MCU. Different from general-purpose chips, differentiated customized chips focus on niche markets and take a unique approach to avoid the fierce competition of general-purpose chips. This requires experienced marketers to define the product in place, and at the same time have strong technical support.

In fact, while domestic BLE manufacturers are working hard to improve their internal strength, they are also looking for a path that suits them. In particular, many manufacturers have begun to try out the long-tail market such as remote controls and PC accessories mentioned above.

In addition, another direction is to "go global." Li Hongyu told reporters: "We have begun to enter the Japanese market and have been recognized by several major customers." Going global can also open up new horizons for domestically produced chips.

The continued growth of the BLE market has attracted the attention of many giants. On September 27, Huawei announced its entry into this market with the BT/BLE dual-mode 5.1 wearable chip, Kirin A1. This chip can support both TWS headphones and bracelets. Although this chip is currently produced and sold by itself, who can guarantee that it will not enter the open market in the future?

With many competitors vying for supremacy, the BLE chip market is extremely hot in this cold winter.