Icera - big moves, big dreams

Monday, April 7, 2008

Bristol-based Icera Semiconductors announced today that it was acquiring Sirific Wireless for its complementary mobile RF capabilities. With this all-share merger for an undisclosed sum, Icera now hopes to offer a more complete 3G+ mobile chipset. (Read earlier coverage of Icera here and here.)

Sirific, founded in 2000, is a fabless semiconductor company developing CMOS RF transceivers for various mobile technologies including 3G and beyond. It boasts of expertise in digital RF, one of the more difficult design problems in mobile circuitry. It has raised around $60mn till date.

With a series C funding closed recently, Icera has now raised a little over $140mn in venture funding. So, the combined entity has over $200mn in venture money – an impressive amount demonstrating the VC confidence in this startup. Icera plans to raise a further $100mn later this year positioning itself for an IPO at the London stock exchange in 2 years.

Is it justified in dreaming big? Why go for Sirific?

Well, Icera has a niche product with its soft modems. Soft modems are highly customizable and upgradeable. The technology and the concepts involved, if rightly done, can be used for any wireless standard allowing for easier integration that is vital for tomorrow’s convergence devices. Icera’s thinking is that Sirific’s RF frontend and digital RF expertise will complement its revolutionary Livanto soft modem solution. This will not only allow Icera to come up with more complete, in-house platforms and reference designs but also offer a roadmap to highly integrated baseband + RF products in the future.

Icera is beginning to gain traction in the wireless data card market that it is currently targeting. It has signed a deal with Option, Europe’s laptop wireless data card leader and aims to capture 33% of the global data card market by the end of next year. But with the move towards in-built wireless broadband capabilities, products such as Qualcomm’s Gobi and the convergence devices phenomenon, data cards will become superfluous in the future. So to create a larger impact, the company has to make it big in the higher volume mobile phone space.

It has, however, not gotten nearly as much traction in the mobile space. What it needs is a strong alliance with a company like TI that offers application processors. Like I mentioned for InterDigital, such an alliance will allow it to piggyback on TI’s support network and economy of scale to win market share for its baseband (now baseband + RF) business. In turn, this will also help TI retain its 3G market share.Earlier coverage on this topic can be found here, here and here.

Icera has the technology to take it into the future. It needs to however sustain in the fiercely competitive mobile vendor space. The data card market will help on that front in the short term. Besides positively approaching the mobile phone market with the strategic acquisition of Sirific, Icera has certainly made a bold statement indicating that its IPO ambitions are real. The flotation valuation of such an IPO will be determined much by the design wins it secures in the mobile broadband space and perhaps on a few other strategic alliances.

Posted by Vijay Nagarajan at 11:00 PM  

4 comments:

I agree that Icera needs a much closer relationship with an application processor company, but you also make one major mistake in your analysis: Gobi doesn't threaten Icera because they're already present in the mobile PC market.

http://www.option.com/docs/datasheets/GTM501.pdf is based on Icera's 90nm chip, which is the only module for UMPCs and MIDs based on the Menlow platform (Silverthorne) that has been engineering in collaboration with Intel. I wouldn't be surprised at all if it was going to have a majority of the 2008 UMPC/MID market share.

However, I will admit that I'm not very optimistic about UMPCs and MIDs. The point remains though that Icera clearly has a good positioning in the mobile PC market, and I'm surprised they didn't claim to want 33% of that area too. As for GPS in Gobi - well, that's not single-chip, so I don't think it really matters compared to Icera's solution.

Anyway Icera had a partnership with PortalPlayer, but that wasn't a competitive solution and PP got acquired by NVIDIA... They should really focus on platforms now, ideally System-in-Package, with application processor companies such as Samsung, NVIDIA and TI.

Arun Demeure said...
April 9, 2008 at 7:22 AM  

Arun,

Thanks for your technical insights on this topic. The point I was making with Gobi was the bigger trend towards inbuilt broadband modules in laptops as against data cards. Intel also is now getting WiMax into their product offerings. I think that in the long run, products such as Gobi will eat into and displace the market for data cards. Any thoughts?

Vijay

Vijay Nagarajan said...
April 9, 2008 at 9:45 AM  

Hello Vijay, I obviously agree this kind of integration will hurt the data card market. However it won't kill it either unless it is integrated into every single notebook, which seems incredibly unlikely. So I suspect the data card market will still grow (just not as fast as otherwise), let alone because the notebook market is booming in general and 3G usage worldwide remains very low compared to its potential.

Anyhow my main point was that even if the data card market disappeared, Icera's positioning in mobile PCs was still strong; in fact their design win with the GTM501 at Option is for an embedded wireless module as I said, not a data card. So the concept behind Gobi doesn't threaten them, they'll just be competing for design wins in the same market.

As for WiMax, it's worth pointing out that Icera is working on implementing that (in terms of baseband, not RF). Obviously their cost for that is 100% R&D, in terms of hardware their architecture can already handle it perfectly fine. So in fact, if WiMax picks up, that'll make their positioning in notebooks even much stronger rather than weaker.

BTW, congratulations on your bet for the 3G iPhone apparently being right; just Google News 'iPhone Infineon' to see what I mean. That's not 100% reliable (it could be a generic entry or the non -H for a 2G iPhone refresh), but it is a strong indicator they got the slot anyway.

wrt InterDigital, I am curious what you think about power consumption. If Infineon has been selected by Apple, that would be a good hint their power consumption is very good. So since the stack is InterDigital's, I wonder how much of an influence that might have on the power consumption of the latter. I'll admit not to have a very good idea of the hardware implementation details of both companies' basebands and how they differ, if at all.

Arun Demeure said...
April 9, 2008 at 1:52 PM  

Arun,

That was good clarity on the Icera products. Thanks.

Thanks also for pointing me to the news today. It is a good sign. Like I have been saying, mere logistics is a good argument for Apple to continue with Infineon in the short term. So, the MP-EH platform with SGOLD-3H seems ideal. I will perhaps have a detailed post later today on this.

I am not sure about how the architecture works for SGOLD-3H. But I think that InterDigital's baseband equalizer algorithms are inside SGOLD-3H. The software stack will certainly have power management features especially when searching and when idle. Also, the way I look at it, Apple cares for the complete solution being low on power consumption. So, my guess is that InterDigital and Infineon would work together to customize the solution for the iPhone to meet its stringent requirements.

The signs are good for Infineon and InterDigital, but we will have to wait for the real tear-down.

Vijay Nagarajan said...
April 9, 2008 at 2:22 PM  

Post a Comment