ST Microelectronics - Wireless Business

Monday, May 26, 2008

[Originally for Sramana Mitra's site]

The JV with NXP has given STM the scale to succeed in the mobile wireless space. Putting its weight behind the convergence movement, the company plans to leverage its full suite of wireless solutions to enable the advanced mobile devices coming out of the Nokia stables among others. Let us now try and understand the company’s wireless products, strategy, and outlook.

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.

Posted by Vijay Nagarajan at 9:00 AM  

2 comments:

Thanks Vijay Nagarajan for yet again a very interesting blog entry. I would like to add that NXP has something else in store which might turn out to be a valuable asset in the future: the EVP Software Defined Radio processor. I cannot envision a true converged era without SDR and, at a later stage, Cognitive Radio technologies.

I am however very curious to see how and when these technologies will be introduced. At the network side the companies have been very reluctant to use the term SDR. They do not want to stress the fact that an upgrade is merely a software issue, you cannot charge a lot for that. I have the feeling that SDR might make a similar silent entry into the mobile phone market.

T. Dubois said...
May 27, 2008 at 12:07 AM  

T.Dubois,

Thanks for your note. I agree that there are more business reasons than technical why SDR adoption will be slow. Icera has taken the SDR approach and has found some traction. Icera's strategy to monetize SDR seems to be continual tape-out of faster processors with more capabilities.

As far as SDR in convergence devices is concerned, I see it as being a component in the second wave. This second wave will happen only after the concept of convergence is etched in the consumer's mind.

Vijay

Vijay Nagarajan said...
May 27, 2008 at 12:09 PM  

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