The Russian market of electronic components for wireless communication

In 2019, two major purchases took place on the Wi-Fi market, which may produce a significant impact on the wireless communication market of the Russian Federation over time.
NXP Semiconductors Company has purchased Marvell Technology Group’s business for manufacturing wireless solutions aiming at expanding its portfolio. From now on, NXP will offer Marvell’s products for wireless connection: Wi-Fi and Bluetooth chipsets, as well as its own advanced computing platforms – to clients in manufacturing, automotive, and computing industries. Marvell is a fabless company; in fact, NXP bought not the certain field, but an intellectual property package.
Previously, NXP had planned to acquire another Wi-Fi market player – Qualcomm company – but failed to get approval from the Chinese regulatory authority, amid escalating tensions in relations between China and the United States.
According to NXP website, besides global players Russian distributors include Symmetron and Dektel companies. Marvell hasn’t cooperated with Russian distributors.
In late March 2019, it was announced that Quantenna would be sold to American chip manufacturer ON Semiconductor for $1 billion.
The CEO and President of ON Semiconductor Keith Jackson said that after acquiring Quantenna the company will be able to strengthen its product range for wireless communication due to the software and Wi-Fi technologies obtained from the purchased chipmaker. Until now, the ON Semiconductor portfolio of wireless solutions used to include radio frequency transceivers supporting Bluetooth, Sigfox, ZigBee, Threat, 6LoWPAN, and other protocols. 
Quantenna is one of the world leaders and innovators in the field of high-performance Wi-Fi solutions. As of February 2019, half a hundred Quantenna’s clients included such global Telecom operators as Telefonica, Swisscom, BskyB, France Telecom, Comcast, Orange and AT&T. The company’s solutions are used in the products offered by such vendors as Motorola, Cisco, Samsung, and Huawei – both for cable and satellite TV systems and for home Wi-Fi on the retail market. Quantenna brought 8×8 MIMO chip to the Wi-Fi market, which secured a speed of 10 GB/s.
According to the company’s website, ON Semiconductor cooperates with such distributors as Macro Group and Compel.
As for today, almost every urban resident uses Wi-Fi. Every day, we pass hundreds of wireless connection points, using them as an integral part of our technologies. Despite the fact that various wireless technologies, including mobile connection, are developing at breakneck speed, Wi-Fi has become the most integral part of our lives. It has become an irreplaceable and mandatory element of any information and communication infrastructure. No one doubts that there will be a demand for it for decades to come.
Market companies understand it and do their best not to miss opportunities to expand their business.
Nowadays in the wireless communications field, three families of technologies for transferring information are the most common and well-known, such as: Wi-Fi, GSM, and Bluetooth.
It is extremely difficult to analyze wireless communication imports in Russia, since there is no particular customs code for that. If you find an error or see that your brand is not presented here, please write it in the comments.
The most common customs code used for importing wireless devices and components to Russia is as follows:
8517620009 other machines for reception, conversion and transfer or restore voice, images or other data.

If considering this code, the TOP brands in the rating for the second half of 2018 looks like the following – Table 1.

Table 1. TOP 14. Rating of the brands for the second half of 2018.

	Manufacturer
1	APPLE INC.
2	ZTE CORPORATION
3	SAMSUNG ELECTRONICS VIETNAM CO. LTD
4	TP-LINK TECHNOLOGIES CO LTD
5	KEENETIC LIMITED
6	D-LINK CORPORATION
7	HUAWEI TECHNOLOGIES CO. LTD.
8	SERNET(SUZHOU) TECHNOLOGIES CORP
9	HUAWEI TECHNOLOGIES CO. LTD
10	SAMSUNG ELECTRONICS VIETNAM CO. LTD.
11	CHENGDU EBYTE ELECTRONIC TECHNOLOGY CO. LTD
12	MOTOROLA SOLUTIONS
13	SERCOMM CORPORATION
14	MOTOROLA SOLUTIONS GERMANY GMBH

Again, the data presented here is for the second half of 2018. Many brands are worth 423 million USD, which includes a large variety of machines for reception, conversion and transfer. It’s unsuitable for us. We are interested in electronic components, but not routers or finished network equipment. We don’t need IT distributors’ import either.
To narrow down the task and get the relevant result, we will take a different approach to the solution. We will consider the consignees’ rating by all brands for the second half of 2018 and use my database of supplying importers. We will overlay these data and select only real distributors and brokers of electronic components (Table 2) from this rating, such as Radiant, Promelektronika, Triatron, Radiotechnikomplekt, Elitan, etc. The main thing is that they should specialized in components supply.
 
Table 2. The rating of distributors and brokers of electronic components under the customs code 8517620009 for the second half of 2018.

	Total
1	2,517,983
2	558,457
3	488,251
4	338,393
5	211,267
6	181,998
7	100,914
8	63,441
9	63,434
10	29,163
11	27,375
12	22,274
13	19,119
14	12,279

The total amount will be much smaller, but the actual amount of wireless electronic components imported to Russia will be presented. Of course, this is not full data, but it will help us to highlight the brands that are promoted by distributors of electronic components in Russia that import products under the customs code 8517620009.
Next, we apply three filters: all intermediaries from Table 2, code 8517620009, and brands. In Table 3, we get the relevant result – brands imported by distributors to Russia.

Table 3. Import of brand for the second half of 2018 by distributors from Table 2.

Manufacturer

SIMCOM WIRELESS SOLUTIONS LTD.

SIERRA WIRELESS

DIGI INTERNATIONAL INC

MINE SITE TECHNOLOGIES CHINA CO.LTD

TELIT WIRELESS/COMMUNICATIONS

U-BLOX AG

QUECTEL WIRELESS SOLUTIONS COMPANY LIMITED

GEMALTO M2M GMBH

SILICON LABORATORIES INTERNATIONAL PTE. LTD

SPARKLAN COMMUNICATIONS INC.

TEXAS INSTRUMENTS INCORPORATED

SHENZHEN NEOWAY TECHNOLOGY CO. LTD

STMICROELECTRONICS

ESPRESSIF SYSTEMS (SHANGHAI) PTE. LTD

MICROCHIP TECHNOLOGY INC.

DINAMICA GENERALE SPA

WIZNET EUROPE GMBH

SHENZHEN RAKWIRELESS TECHNOLOGY CO. LTD

Now, let’s compile table 4and find out what are these companies

Table 4. Brand name and its products.

Manufacturer	Total
SIMCOM WIRELESS SOLUTIONS LTD.	According to the latest M2M report by ABI Research Inc., SIMCom is the global leader in wireless module sales for four consecutive years.
SIERRA WIRELESS	Sierra Wireless is an international developer and manufacturer of wireless communication equipment
DIGI INTERNATIONAL INC	Manufacturs wireless devices, processor units, and Ethernet products.
MINE SITE TECHNOLOGIES	Mine SiteTechnologies (MST) supplies communications solutions, as well as optimization software solutions that help organizations of the mining and industrial sectors manage their key production processes in the optimum way
TELIT WIRELESS/ COMMUNICATIONS	Telit offers the most complete portfolio of IoT modules, compatible GSM modules, system (SoM) and navigation (GNSS) modules, combo-, SMART-, Wi-Fi-, Bluetooth-, LoRa-, ZigBee-, and SRRF-modules
U-BLOX AG	u-blox is a Swiss company that manufacturers wireless semiconductors and modules for the consumer, automotive and industrial markets.
QUECTEL WIRELESS	Quectel is the world’s leading provider of cellular communication and GNSS modules, offering a wide product range.
GEMALTO M2M GMBH	Gemalto M2M is the world’s leading supplier of cellular communication modules
SILICON LABORATORIES INC.	The leading supplier for all major IoT ecosystems, Silicon Labs. Tools for rapid development of smart home, as well as for commercial, consumer, and industrial applications.
SPARKLAN COMMUNICATION INC.	SparkLAN is one of the world’s leading suppliers of wireless networks solutions. The product range includes wireless built-in modules and wireless network devices
TEXAS INSTRUMENTS	The wireless connection portfolio consists of integrated circuits and modules for all your requirements in the wireless technology field.
SHENZHEN NEOWAY TECHNOLOGY	NEOWAY products include cellular modules, 2G / 3G / 4G / NB-IoT / eMTC devices and solutions
STMICROELECTRONICS	The ST portfolio includes various radio frequency transceivers, integrated circuits for network units, and fully certified modules for key wireless connection technologies
ESPRESSIF SYSTEMS (SHANGHAI) PTE. LTD	Development of advanced IoT solutions with low-power Wi-Fi and Bluetooth.
MICROCHIP TECHNOLOGY INC.	Supplies modules and circuits for wireless communication
DINAMICA GENERALE SPA	The company manufacturers weighing and BIC (infrared) analysis systems for agriculture and industry.
WIZNET EUROPE GMBH	Wiznet company specializes in development and production of circuits for Ethernet applications, as well as finished modules on their besis. Also, Wiznet offers a Wi-Fi modules line
SHENZHEN RAKWIRELESS TECHNOLOGY CO. LTD	A worldwide supplier of IoT Wi-Fi and video Wi-Fi modules.

In total, under the customs code 8517620009 these companies imported products worth 5.8 million dollars to Russia. What will this table show to us?
First of all, that our idea of conducting analysis using distributors is justified. We may have failed to receive all the sales volume, but you must agree that there is a significant difference between 423 million and 5.8 million. If we conducted analysis of the finished telecommunications equipment, our 5.8 million dollar-worth sales of modules and components would account for just 1.3%, which is an acceptable margin of error for a total of 423 million. But our task is measurable and the inverse figure makes an error of thousands of percent.
Second, almost all the listed companies are highly specialized, but for TEXAS INSTRUMENTS, STMICROELECTRONICS, WIZNET EUROPE GMBH and SILICON LABORATORIES INC, whose wireless products account for a small share in the company’s product line if compared to IS.
For example, TEXAS INSTRUMENTS imported $50 million-worth products to Russia.
Now that we have figured out the key distribution brands and at the same time identified a list of brands that deal in wireless components only, we can calculate the total import amount of these brands. We can compile Table5 – the brand’s total import, but for the four listed, by the common customs code 85*, which includes all electronic components. I won’t unload unnecessary information on the readers, but the result will look like this.

Table 5. Brand’s import under five customs codes, their total and the brand’s import total.

Manufacturer	85176 20009	85176 99000	85299 06509	85177 09009	Total	Total import
SIMCOM WIRELESS SOLUTIONS LTD	3000000	0	687 000	49000	3 736 000	3755000
SIERRA WIRELESS	586000	0	0	0	586 000	591887
DIGI INTERNATIONAL	583000		0	0	583 000	986000
MINE SITE TECHNOLOGIES CHINA	381000	13000		0	394 000	691159
TELIT WIRELESS SOLUTIONS GMBH	350000	0	0	0	350 000	385000
U-BLOX AG	185000	0	496 000	0	681 000	1000000
QUECTEL WIRELESS SOLUTIONS COMPANY LIMITED	1360000	0	224 000	73 603	1 657 603	2153000
GEMALTO M2M GMBH	135000	0	0	5 230 000	5 365 000	5391000
SILICON LABORATORIES INTERNATIONAL	129000	0	0	0	129 000	129000
SPARKLAN COMMUNICATIONS INC.	75000	0	0	0	75 000	76000
TEXAS INSTRUMENTS INCORPORATED	71000	0	0	0	71 000	71 000
SHENZHEN NEOWAY TECHNOLOGY CO. LTD	57000	6000	0	0	63 000	76000
STMICROELECTRONICS	49000	0	0	0	49 000	49 000
ESPRESSIF SYSTEMS (SHANGHAI) PTE. LTD	32000	41000	0	0	73 000	75704
MICROCHIP TECHNOLOGY	28000	0	0	0	28 000	28 000
DINAMICA GENERALE SPA	22000	0	0	0	22 000	69000
WIZNET EUROPE GMBH	6000	0	0	0	6 000	6000
SHENZHEN RAKWIRELESS TECHNOLOGY	2000	0	0	0	2 000	4000
					13 870 603	15536750

 

For your convenience, I will provide the customs code definition in Table 6, in customs original.

Table 6. The custom code definition.

8517620009	Other machines for reception, conversion and transfer or restore voice, images or other data
8517699000	Apparatus for the transmission or reception of voice, images or other data
8529906509	Parts suitable for use solely or principally with the apparatus of heading 8525-8528, electronic modules
8517709009	Telephone parts, including telephones for cellular networks or for other wireless networks; other apparatus for transmission or reception of voice, images or other data.

In Table 5 it’s important to understand:
1. The data is for the second half of 2018.
2. The “Total” column – is the sum of all 4 customs codes listed in the table.
3. Import – it the brand’s total import under all codes starting from IS to screws if the manufacturer offers them.

Of course, I can’t claim the resulting figure to be the final one. This is not as affirmative as when analyzing integrated circuits of programmable logic Altera and Xilinx, where you can be sure in every dollar. Here, hundreds of telecommunications brands produce extremely strong influence that should be filtered out.
Thus, the guaranteed total of wireless electronic components and modules is $14 million for the second half of 2018. But if we consider direct deliveries to manufacturers and smaller brands, then I can roughly take the market range within 18 million for the second half of 2018.  I won’t say for the whole year, since the year halves may differ significantly. Feel free to write to us if you want to get a report for the whole 2019, including all distributors and manufacturers.
What else can I add? If you want to earn your place in the Russian sun, you should consider the products and pricing of the above-mentioned companies.
And what about the two news about purchases at the beginning of the article?  Nothing at all. For the Russian market of electronic components and wireless solutions, they mean nothing for at least 3-5 years.

Comment.
I haven’t found even a roughly similar analysis on the domestic market. Almost all analytical reports deal either with finished products or with the Wi-Fi points, covering zones, etc. Due to the fact that this analysis is highly specialized and unique, errors are possible. I will be grateful for any comments, suggestions and actual figures that you can feel free to write in the comments or via feedback.

And what about Russia?

Unfortunately, in Russia everything is not so good about development of electronic components for wireless communication or I just have no information. If the reader has a different opinion, feel free to write.
In general, if we compare it with the article, only radio modules are made in Russia. Moreover, there are plenty of clients who use radio modules developed by their companies. For example, waviot company, whose standard has now been approved by the Federal Agency for technical regulation and Metrology (Rosstandart) as a preliminary national standard of the Russian Federation. However, due to the business model, the company doesn’t sell its radio models; they are included into the products. Leastwise, my request has met with no response.
However, there are companies in Russia that make modules for sale.
For example, SMK company (sysmc.ru), with one of whose executives I managed to talk; in fact, his answers laid the basis for my understanding of the market of Russian-made wireless electronic components. The company attracted me by its distributor section, which is the exception rather than the rule for a Russian company. In all the articles, I stress that avoidance of distributors is the company’s mistake. The only exception is work on government orders or in very narrow niches. For example, like “Monocrystal” company, which is the global leader on the market of artificial sapphires for LEDs and screens, which even managed to become Apple’s direct supplier.
And SMK company’s statistics prove that I am right. Distributors account for about 50% of sales. But the most important thing that they also account for 90% of new customers.
In this regard, Russia is a unique country – depending on the brand or product, intermediaries’ share in sales is around 50-90%. In this context the word has no negative connotation – it just meets all the criteria that describe the whole range from distributor and broker to personal relationships and one-day companies.
Let’s take table 3 and the first three brands by sales as an example and overlay table 2 onto it. We get the share of intermediaries in the sales in table 2.

Table 6. % of sales through intermediaries by brands from Table 3.

Manufacturer	%
SIMCOM WIRELESS SOLUTIONS	80
SIERRA	90
DIGI INTERNATIONA	95

Let’s return to SMK company. Despite the fact that they use an imported base, in particular CC430 by TexasInstruments. Here, they have no choice – in Russia I have found no information about analogues or promising developments on the Russian civilian market of wireless components. The plates are manufactured in China and assembled in Russia. But the company has started and completed the wireless module development all by itself. According to the company – and I didn’t manage to prove them wrong – there are no manufacturers of narrow-band wireless modules in Russia, particularly modules, other than SMK.
Perhaps this is due to the fact that it is extremely expensive to develop a radio channel and becomes reasonable only in case of producing at least 10,000 units. Therefore, should the need arise most major manufacturers develop a radio channel on their own, since they plan to produce more than 10,000 units. But such companies deal with their own products only. The modular solution is suitable for small-scale projects (from a few to several thousands of units). There are only few large manufacturers, and CMK managed to find its niche among other companies.
The company positions another competitive advantage.
“Organizations that plan to implement and operate wireless monitoring networks don’t trust “providers”, not being sure that they won’t close down or start raising the rent. Our solution is transferred in full and we charge no further fees.”
This is how the Russian market of wireless components in the civil electronics sector can be generally described.

1. Wireless modules for large-scale end products are manufactured by the companies themselves or imported.
2. For small-scale production, radio modules developed in Russia are used.

They have one thing in common: they all use an imported component base.

At the same time, the part “wireless” can be found only twice in the strategy of the electronic industry development, and in both cases, it has no exact definition. And there are no such words as “communication”, “Wi-Fi”, “Bluetooth”, “ZigBee”, etc.