Wireless Module or SoC? Cost Considerations in IoT Design
Should your IoT design use a wireless module or a System-on-Chip (SoC)? This article presents a deep dive into the cost implications of each option, assisting you in making an informed, cost-effective decision.
Whether to use a wireless module or a System-on-Chip (SoC) can be a pivotal—but challenging—decision when designing an Internet of Things (IoT) device. Each option has unique advantages and disadvantages associated with it, and choosing the right technology requires balancing performance, features, and costs. In this article, we’ll remove some of the uncertainty from this process by comparing the cost implications of wireless modules and SoCs in detail.
Understanding Wireless Modules and SoCs
Let’s briefly review the technologies under discussion.
A wireless module is a pre-certified unit that serves as a complete wireless solution, typically encompassing a radio transceiver with a microcontroller, software stack, and antennas. Wireless modules are favored for their ease of use and reduced development time.
Figure 1. Block diagram of the MRF24WB0MA/MB 2.4 GHz IEEE 802.11b/g/n wireless module. Image used courtesy of Microchip
A System-on-Chip (SoC) is an integrated circuit that combines a microcontroller unit and radio-frequency (RF) front-end on the same silicon die. SoCs offer more control and flexibility but require more design effort.
Figure 2. Diagram of a generic SoC. Image used courtesy of Michael Keating and Pierre Bricaud
Cost Comparison of Wireless Modules and SoCs
We’ll use the following metrics to compare the costs of wireless modules and SoCs:
- Initial purchase costs.
- Development costs.
- Supply chain costs.
- Scalability costs.
Initial Purchase and Development Costs
Wireless modules include pre-certified RF circuitry, antennae, and a software stack, all of which raise the cost of purchasing one. SoCs, by contrast, are just integrated circuits without additional components. Because they lack the add-ons seen in wireless modules, their initial purchase cost is lower. This makes SoCs attractive for designers on a budget.
That same simplicity, however, means that development costs can escalate quickly. Consider the following list of development-related expenses:
- RF design and engineering expenses.
- Investment in lab equipment and infrastructure.
- Cost of PCB configuration and antenna choice.
- Certification costs.
Wireless modules include pre-designed, pre-tested RF circuitry, which removes the need for in-house RF design expertise and reduces the need for laboratory testing. They also typically come pre-certified and include a built-in antenna and pinout, which simplifies the PCB layout process. These things are built into the initial purchase cost, and don’t require more spending during the development stage.
SoC-based designs, on the other hand, require additional expense and time for design, testing, and certification before they can reach the market. Designs based on wireless modules have a shorter time to market, leading to a quicker return on investment.
Supply Chain and Scalability Costs
It’s easier to source a module than all the separate parts needed for an SoC-based design. The latter option can lead to higher supply risk, especially for smaller companies or during times of component shortages. However, dependency on a module vendor for supply continuity can be costly. Larger companies or high-volume production runs may benefit from more control over the supply chain if they choose SoCs.
As well, wireless modules typically mean a higher per-unit cost—a disadvantage when scaling up. For large-scale production, the lower per-unit costs of SoCs may balance out the higher development costs.
Breakeven Example: Wireless Module vs. SoC
Tom Nordman, Joe Tillison, and Nick Dutton from Silicon Labs analyzed the costs of using a wireless module and an SoC in IoT designs. They compared the costs of the BGM210P Wireless Bluetooth module and the EFR32BG21 Bluetooth SoC, both priced for 300,000-unit quantities.
They based their cost comparison on the following assumptions:
- Across annual volumes of 10,000 to 300,000 units, the wireless module and the SoC are priced at $2.99 and $1.11, respectively.
- The SoC’s bill of materials (BoM) combined with testing during manufacturing costs an estimated $0.55 per unit. $0.05 of this cost is from testing; $0.50 is the BoM.
- They calculated the gross margin (the difference between the product’s selling price and its production cost) of their product to be $4.98.
- The gross margin of $4.98 is stated to be 40% above the module price, meaning that the margin is 40% greater than the cost incurred when they use a wireless module in their product.
- The SoC is considered to need an extra six months of development time, due to its complex design, certification, and regulatory approval processes. This is assumed to cost an additional $50,000 or so, based on an average engineer salary of $100,000 per year.
With these considerations in mind, and accounting for time to market and lost revenue implications of using an SoC, the break-even volume for annual production lies between 500,000 and 1,300,000 units. If we disregard the lost revenue due to time-to-market delays, the breakeven falls between 100,000 and 200,000 units. Breakeven and break-even volume both refer here to the range of production volumes where the profits from using an SoC start to equal (and subsequently surpass) the profits from using a wireless module.
The graph of the Silicon Labs team’s analysis can be found in Figure 3. The zone inside the yellow lines represents the break-even volume. This volume is a range, rather than a point, due to the risks and uncertainties involved in the production process.
Figure 3. Breakeven for a wireless SoC and wireless module. Image used courtesy of Silicon Labs
At volumes below 500,000 units, using a wireless module is more profitable than using an SoC. This is due to the higher upfront costs and time to market associated with SoCs. However, once production volumes reach the break-even zone, these upfront costs have potentially been spread out over a sufficiently large number of units to make the SoC a more profitable choice.
The authors note that SoCs may not be the best choice for all high-volume products. For example, some best-selling mobile devices opt for wireless modules due to the challenges of miniaturization in IoT devices, which this breakeven comparison doesn’t consider. Wireless modules provide compact design (SiP modules), full global certifications, and competitive component costs. SoCs, despite potential large-scale cost benefits, carry unquantifiable risks like technical hiccups or certification issues.
The Best Choice
Designing with SoCs gives product developers the flexibility to custom-design their systems and to integrate the hardware and software functionality they need. The flip side of this customizability is increased complexity and higher development time—the designer needs to have a deep understanding of the SoC architecture and the software that runs on it.
By contrast, pre-made wireless modules typically demand less time and expertise for development, but may fall short when it comes to customization and integration. Wireless modules could be more cost-effective for smaller production runs, or if rapid time to market is crucial; SoCs might be more cost-efficient for larger production volumes, or if in-house expertise is available.
So in the end, what’s the most cost-effective choice? It's a fluid answer that depends on many factors: the specific product, the designer, the urgency of the product launch, the production volume, and more. Hopefully, this article has helped make your choice an informed one.