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This is a prediction of the distortion. It is a good predictor for distortion that is small, but still significant. The higher the number the lower the distortion. For the case of two large equal signals, the distortion terms will be of an amplitude (relative the two large signals) equal to twice the difference between the signal levels and the OIP3 value down from either of the two large signals. Example: two -20 dBm signals with an amplifier OIP3 of 0 dBm will produce distortion terms at -60 dBm.
OIP3 = Pout + dBc/2
Where dBc is the difference in amplitude between one of the two equal amplitude test tones, present at the amplifier input, and the level of the highest 3rd-order distortion product.
For every dB increase in input power, the third order products will increase 3dB.
Very simple explanation, NF define minimum receive signal level, OIP3 or IIP3 define maximum receive signal level (dynamic range). There is simple practical relation between OIP3 and P1dB => OIP3 (dBm) = P1dB (dBm) + 10.
If you see the topology of a typical receiver, you will understand why you need high OIP3 LNA. It is very natural that the receiver will pick up the trasmit frequency, which its power is normally quite large (>+26dBm). If the rejection of front end filter at transmit frequency in insufficient, the LNA will be the one which "suffer" the compression, leading to permanent damage (if exceed the absolute rating). If higher OIP3 LNA is used, the effect can be minimised.
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