Contributors: Bob Wheeler, Jag Bolaria, Joseph Byrne, Michael Stanford In This Issue
Yesterday, STMicroelectronics and NXP announced that they would combine their wireless businesses. Although the deal creates a joint venture (JV), ST is paying NXP $1.55 billion to gain an 80 per cent share of the JV. The results of the JV will appear as part of ST's financials, and ST plans to acquire the remaining 20 per cent of the JV after three years. From a product standpoint, the ST and NXP operations have surprisingly little overlap, despite both companies targeting handsets. ST has long focused on supplying ASICs, while NXP has emphasized standard products. The complementary strategies have yielded complementary customer bases: ST's key relationship is with Nokia; NXP's primary customer is Samsung, and it also has relationships with Chinese manufacturers. ST's key strength is in analog design, but the company has been recently building its digital expertise through an ASIC deal with Ericsson Mobile Products (EMP) and acquisition of Nokia's baseband-processor designers; both deals target HSPA phones. NXP's strength has been in lower-end designs and software, recently supplemented by the mixed-signal expertise of the Silicon Labs business acquired in 2007. The combined entity, therefore, can assemble a broad product line and has strength in integration, RF and digital design, and software. ST has a sizable share in the mobile Wi-Fi and Bluetooth markets, while NXP is a leader in FM radio and NFC and has recently acquired GPS technology. The combined entity may have the resources to invest its way to a leading position. In summary, the acquisition makes good sense for ST. Lacking baseband technology, the company has been losing revenue as the analog baseband and RF were integrated into digital baseband processors. The Nokia deal aims to develop a high-end 3G baseband by 2010, but the NXP deal provides ST a much larger portfolio of technology that is available now. ST may be able to use its relationships with Nokia and other leading handset makers to revitalize NXP's sagging wireless share. From NXP's viewpoint, the deal alleviates its debt burden and provides an exit strategy from the difficult cellular market. —Joe Additional coverage of NXP's baseband products appears in our report A Guide to Wireless Handset Processors. Intel officially announced its Atom processor last week, targeting low-end PCs and mobile Internet devices (MID). With everyone from CEO Paul Otellini on down touting it as an ARM killer, the question is: how far will Atom actually go? Atom combines a new low-power x86 processor with a separate system-logic chip at price points from $45 to $160. The processor operates at 800MHz to 1.86GHz. Intel quotes some very low power numbers, but the two-chip set has an active power of about 2.5W and an "average" power (assuming it is active only 10 per cent of the time) of about 1.2W when running a mobile benchmark. So while Atom delivers more performance than any commercially available ARM processor, it burns several times more power. Furthermore, highly integrated ARM SoCs sell for less than half the price of even the low-end Atom chip set. Realizing Atom cannot compete with ARM in smartphones, Intel has proposed a new category it calls mobile Internet devices (MID), which are larger than a smartphone and can thus hold a more powerful battery. Given consumers' strong preference for pocket-size devices, we are skeptical of this strategy, although MIDs may find their way into vertical applications (e.g., medical), replacing tablet PCs. Atom is also Intel's first embedded x86 processor that can fit into line-powered consumer devices. But the chip set does not integrate key functions such as encryption, Ethernet, and Wi-Fi, rendering it uncompetitive for home networking and set-top boxes. Atom could be used in low-volume applications, such as home media servers, where cost and integration are not primary concerns. Intel claims the second-generation Atom, due in 2009/2010, will offer further power reduction and greater integration. These improvements will be needed for Intel to gain ground in consumer and mobile devices. —Linley Complete coverage of Intel's Atom processor will appear in our upcoming edition of A Guide to High-Speed Embedded Processors. Growing adoption of 3G technologies and feature-rich cell-phone chips led to a 13 per cent increase in sales of cellular baseband processors in 2007, according to the newest report from The Linley Group. Acquisitions and market-share shifts caused significant changes in the ranking of cellular baseband suppliers. Qualcomm overtook Texas Instruments as the leading supplier in revenue terms. Qualcomm benefited from rapid growth in WCDMA shipments on top of its large CDMA business. While maintaining a strong position at handset-leader Nokia, TI was hurt by share losses at Sony Ericsson. Taiwanese tiger MediaTek continued its tear, growing baseband-processor revenue more than 80 per cent in 2007 to overtake struggling Freescale as the third-ranked supplier. Once left for dead, Infineon tripled its revenue to become the fifth-ranked company by increasing sales of its own-designed chips and acquiring the Agere cellular business from LSI. Application-processor revenue turned down in 2007 as leading device makers in Japan and the U.S. shifted to baseband processors with integrated application CPUs. Despite a dip in revenue, TI's OMAP line maintained its dominance of the application-processor market. Freescale's i.MX bucked the downward trend and gained market share. In connectivity chips, Marvell became the leading supplier of mobile Wi-Fi chips, and Broadcom held its position as the top supplier of Bluetooth chips for handsets. --Joe Complete market-share information is available in our new report Communications Silicon Market Share 2007. At CTIA last week, Texas Instruments announced the NaviLink 6.0 and OMAP DM510 chips. The NaviLink chip adds assisted GPS (A-GPS) to TI's Bluetooth and FM chip BlueLink 7.0. TI now offers three main variations of Bluetooth and FM chips. BlueLink provides basic connectivity, WiLink adds Wi-Fi capability, and NaviLink adds GPS. Rapid adoption of GPS by OEMs provides an opportunity for TI to make headway in the Bluetooth market against market-leaders Broadcom and CSR. The OMAP DM510 is the latest multimedia accelerator from TI. Although such accelerators are similar to application processors in construction, incorporating an ARM CPU and various media-processing engines, they cost less and are intended to be used as adjuncts to a baseband processor instead of as a central host processor. The DM510 supports H.264 video encoding and decoding at D1 resolution and 30fps as well as 8-megapixel camera sensors, levels of multimedia performance not available in standard baseband processors from TI and others. —Joe Additional coverage of TI's connectivity chips appears in our report A Guide to Wi-Fi/Bluetooth Connectivity Chips.
In March, Atheros announced partnerships with Nvidia and Infineon. Nvidia is a new entrant in the application processor space and may never bring much volume, but the Infineon relationship may end up being valuable. Infineon announced an ultra-low-cost dual mode GSM/Wi-Fi platform, using the Atheros Wi-Fi chip for VoIP. It is not UMA. For now, the main market for Wi-Fi in handsets is at the high end, but there are arguments for Wi-Fi even in low-priced phones. If Nokia adopts this platform at the low end, where it already uses Infineon as a second source for baseband processors, it would generous significant volume for Atheros. Atheros has a similar partnership with Qualcomm, which has been paying off with a series of 3G dual-mode design wins. To address the concern that standalone Wi-Fi chips will not survive in the handset market, Atheros has introduced Bluetooth and GPS capability, the latter through the acquisition of u-Nav last December. These developments give Atheros the capability to deliver an integrated connectivity chip for handsets. —Michael Additional coverage of Atheros appears in our report A Guide to Wi-Fi/Bluetooth Connectivity Chips. To receive Linley on CE via e-mail, you must register on our web site
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