Wireless Industry Analyst

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.