Wireless Industry Analyst

The backbone of STM’s convergence moves is its mobile multimedia applications processor. As part of its strategic alliance with AMD, the company has developed the latest Nomadik processor integrating functions the multimedia coprocessor and the application processor. These processors can be used in smart phones, mobile Internet devices, mobile computers, portable multimedia and navigation devices, and in-car entertainment systems. STM complements its applications processors with energy management and transceiver solutions. With these initiatives, the company hopes to grow its low single-digit market share in the application processors segment.

Prior to the NXP JV, STM’s mobile connectivity portfolio included a 11b/g WiFi solution and multiple Bluetooth solutions including a Bluetooth/FM SiP. STM has succeeded in increasing its Bluetooth market share to about 5%, thanks to its alliance with Nokia. However, STM’s GPS until last month was focused on Personal Navigation Devices (PND) and automobile markets.

Based on STM’s portfolio (excluding NXP), it is easy to see that until recently, it neither had the complete set of convergence ingredients nor the recipe and scale to compete with a veteran like Qualcomm or the relatively new yet formidably entrant, namely Broadcom. But there are two events that can turn the game in STM’s favor –

Nokia’s multi-sourcing strategy: Nokia’s move last year to source 3G from STM among other vendors was more than a mere next-step in the symbiotic relationship between the two European giants. This signified the end of TI’s joyride, a dent in its wireless stronghold. STM, along with Broadcom, is looking to capitalize on this situation by claiming slices of Nokia’s 40% handset market share.

STM received further assurance from Nokia as the latter transferred about 200 of its chipset design engineers last year. As Nokia looks to exit the chipset space, this move has given STM 3G baseband design capabilities and IP as well. With TI not having a 3G baseband roadmap, STM now has a unique opportunity to catapult itself into the second position among wireless semiconductor companies.

NXP merger: Chief among the synergies between NXP and STM is their complementary convergence capabilities. Just recently, NXP had acquired GPS company GloNav. GloNav’s very strong IP, experienced engineering team, GPS SoC solutions for mobile devices and PNDs will now be a key aspect of STM’s convergence portfolio.

NXP also brings deep expertise and products in Bluetooth and WiFi as well. STM and NXP together have about 10% of the Bluetooth market today. Finally, NXP provides more baseband expertise, especially in the GSM/GPRS/EDGE space. I am however unable to judge 3G expertise given that the IP core for its HSPA-EDGE product is licensed from InterDigital.

STM now has all the raw materials needed to take on the convergence movement. It however lags in its product roadmap by at least a year. Convergence has to be accompanied by integration efforts. With new baseband capabilities, we can expect STM to make an integrated 3G baseband and applications processor. We will also see integrated connectivity products.

The company’s strong relationship with Nokia will however buy it time. It will likely drive STM's wireless product strategy. I don’t see anything wrong with that for now. With its understanding of the global mobile market and its brand-name, Nokia is a great resource for STM. The Italian company needs to work closely with the leading handset vendor to determine the market direction and focus its internal R&D in that direction. It should however desist from being complacent. It is perhaps TI’s complacency that has given STM this opportunity in the first place. It is now up to STM to learn from TI’s situation, sustain and grow its share within Nokia.