The concept of intercept point is based on the assumption of a weakly nonlinear system, meaning that higher-order nonlinear terms are small enough to be negligible. In practice, the weakly nonlinear assumption may not hold for the upper end of the input power range, be it during measurement or during use of the amplifier. As a consequence, measured or simulated data will deviate from the ideal slope of n. The intercept point according to its basic definition should be determined by drawing the straight lines with slope 1 and n through the measured data at the smallest possible power level (possibly limited towards lower power levels by instrument or device noise). It is a frequent mistake to derive intercept points by either changing the slope of the straight lines, or fitting them to points measured at too high a power level. In certain situations such a measure can be useful, but it is not an intercept point according to definition. Its value depends on the measurement conditions that need to be documented, whereas the IP according to definition is mostly unambiguous; although there is some dependency on frequency and tone spacing, depending on the physics of the device-under-test.
One of the useful applications of third order intercept point is as a rule-of-thumb measure to estimate nonlinear products. It can be seen that the spacing between two straight lines with slopes of 3 and 1 closes with slope 2.
For example, assume a device with an input-referred third-order intercept point of 10 dBm is driven with a test signal of −5 dBm. This power is 15 dB below the intercept point, therefore nonlinear products will appear at approximately 2x15 dB below the test signal power at the device output (in other words, 3×15 dB below the output-referred third-order intercept point).
A rule-of-thumb that holds for many linear radio frequency amplifiers is that the 1 dB compression point falls approximately 10 dB below the third-order intercept point.
Read more about this topic: Third-order Intercept Point
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