Infineon - Wireless Business
Saturday, June 28, 2008
[Originally for Sramana Mitra's site]
We recently evaluated Infineon’s industrial and automotive business and its wireline communications business. Let us now take a quick look at its wireless communications business that has been in the news for the past year due to the company’s presence in the iPhone.
Apart from the cellular ICs, Infineon has a low, non-negligible market share in the Bluetooth market. In collaboration with Global Locate (now Broadcom), Infineon also developed the Hammerhead II A-GPS solution for the cellular market. It also has a presence in the digital cordless and RF power markets.
While Infineon specializes in low-power chipsets and is looking to increase its wireless footprint across
Infineon’s strategy seems to be to provide low-cost cellular platforms whose gaps can be filled by other vendors. The 2G iPhone platform is a good example. While its cellular ICs were from Infineon, the application processor was from Samsung, WLAN from Marvell and Bluetooth from CSR. This model will work fine as long as handset vendors are interested in picking the best-in-class components based on cost and performance. If, on the other hand, the trend drifts towards highly integrated single vendor solutions, the handicaps in Infineon’s mobile portfolio will result in the company losing its market share, potentially including iPhone designs 2009 and beyond. Infineon will not be in a position to compete with the likes of Qualcomm, Broadcom and STM, all of whom have a complete portfolio to build single-stop cellular platforms.
A note on 3G iPhone's GPS
Tuesday, June 10, 2008
My first premise is that Infineon's XMM6080 platform will be in the 3G iPhone. Now, if we look at the product brief of the XMM6080 here, the block diagram clearly states that the GPS capability of this platform comes from "Infineon/Global Locate A-GPS Hammerhead PMB2520/25." As we all know, Broadcom acquired Global Locate last year.
This is my simple argument that Broadcom owns the GPS slot in the 3G iPhone. Counter arguments, anyone?
Broadcom - Aggression in the Cell Phone Market
Tuesday, February 26, 2008
We have so far looked at Broadcom’s Enterprise Networking business, Broadband Communications business, and the Bluetooth and WLAN components of its Mobile and Wireless Business. I will now look at its cellular mobile business which, in my mind, is the make-or-break component for the company.
The cellular space is Broadcom’s avenue for growth today considering that all its other businesses are mature. With these turning into flat, stable revenue streams, the move to challenge Qualcomm, TI and the others in the cellular IC market was a necessary gamble. Broadcom is approaching the mobile space rather aggressively. Just last year, it broke into the top-5 mobile merchant IC suppliers according to an iSuppli research report. It also announced a string of products including a single-chip 65 nm EDGE chip, a complete HSDPA reference design and its much publicized ‘3G-phone on a chip’. This single chip 3G-phone design, which Broadcom claims is a year ahead of competition, combines baseband and RF functionalities along with FM and multimedia processing capabilities and has been priced at $23 for early customers.
The company has also been involved in an extended legal battle with Qualcomm over intellectual property. From Broadcom’s standpoint, wins here will reduce the pricing advantage that Qualcomm has in the 3G business. Also, it helps project the company as the new champion in the mobile world. If we add the extensive PR campaign through the last two years, it is easy to appreciate the strides Broadcom has made in this space recently.
Broadcom also spent a substantial portion of last year’s revenues directed to this business. This includes its migration to 65 nm (the process technology employed by leading IC vendors in the mobile space) and its purchase of Global Locate for GPS capabilities. Both these are seen as imperatives for the company to stay amongst the top vendors each of whom have a complete portfolio of wireless products to complement their mobile chipset solutions. With these moves and the product announcements, Broadcom is targeting 10% market share by the end of 2009.
While the product and marketing strategy cannot be faulted, it now boils down to execution. In the sequels, I will take a brief look at what this means and also on the expected revenue growth from this division.
Disclaimer: These are my perspectives on Broadcom and does not necessarily reflect the views of Atheros Communications or Tensorcomm.
SiRF - down but not out
Wednesday, February 6, 2008
While it seems to have come as a major surprise to many analysts who were very bullish about the company earlier, it does not to me. Here is a link to my article back in July where I discuss the tough position that SiRF finds itself in. I wish to re-analyze that article here. Here is the thesis statement I made there -
"I wish to make a bold statement: SiRF will find itself marginalized and out of business if it does not diversify into other wireless technologies or strive to have a tie-up with a cellular or WLAN provider."
I followed it up with these reasons -
- interest shown by cellular companies in GPS: This was even before Atheros made a smart move picking up U-Nav (incidentally, I had stated then that U-Nav would be acquired too) and NXP got GloNav. I also mentioned that SiRF with its $2 billion market cap (then) was too big to be acquired. Now the company finds its value almost reduced to a fourth of that valuation.
- Other companies wanting to grad more silicon: That left SiRF as more of a one-trick pony!
- 'Keep the Bill of Materials low' dictum: Effectively, with more competition comes lower margins. This was something I saw as a critical issue that faced SiRF. Today, this has shown its ugly face with a reduced gross margin that has got the Street scampering.
If SiRF is not wary about the growing influence of mobile GPS, then it could lead to a downward spiral. The Street is perhaps justified in its reaction - the reality about the company and the GPS market sank in only now. The threshold to push to stock up is also likely to be quite high. While it is clear that mobile vendors like Qualcomm, TI, NXP and Broadcom will now go for their proprietary GPS chipsets effectively shutting out SiRF from a majority of the mobile market, a good portion of the convergence device market is still open for it to battle with the other smaller players. Even there, the battle will be tough given that companies like Atheros will now strive to bundle their GPS offerings with other peripheral technologies such as bluetooth and WLAN. So it remains to be seen how the company wishes to address this situation now.
The company needs some good design wins in the mobile space now to re-infuse investor confidence. And there is potential. It acquired Centrality Communications for a better positioning in the mobile market. Besides, it has active collaboration efforts with Intel for GPS in laptops, which is not bad considering Intel's path-breaking effort as the core of the Apple Air. If my suspicion is right, we will see more Intel processors in Apple's future convergence devices with smaller form factor than the Air. This bodes well for SiRF.I also think there is a strong possibility that Intel may make a move to buy SiRF.
So, while I am not surprised that the stocks plunged, especially given the reasons that led to the fall, I do think that $7.5 is a little too harsh. It will make a slow recovery this year but will perhaps never see the $40 highs of the past. The company has a strong patent portfolio and is still the GPS leader. Although the lack of diversification has come back to bite it, a strong alignment with a mobile vendor should do its fortunes a lot of good. With its technology leadership, I think it will overcome this crunch. It is down now, but not out yet!
Sirf - Globally Positioning themselves?
Wednesday, August 1, 2007
In my previous article, I had mentioned that Sirf will have to re-invent itself and align with a cellular or WLAN chipmaker to have a more secure future. I had, however, missed this press-release on that same day.
http://www.sirf.com/PressRoom/Press.aspx?PressId=132
Sirf has inked a deal with Intel to license and co-develop GPS solutions for "Intel-inside" laptops. This is significant for the same reasons I had enlisted in my previous article. Bundling with a WLAN solution would help the marketability of Sirf's products. Besides, most laptops coming out today have WLAN in them and are likely to have mobile-chips in the future (dual-mode 3G/WLAN card and the likes). If Sirf can get something similar inked on the mobile-side, then it would be a more interesting future for them.
From Intel's perspective, this is almost a no-brainer. BroadCom purchased Global Locate and is sure to look at bundling the GPS receiver with their WLAN offerings for laptops and mobiles. Though the two companies' products don't compete directly in the WLAN market, any non-Intel laptop with an additional feature can be a market-grabbing product. Besides, QualComm is definitely targetting the data-card market for laptops. So, Intel had to fill in that feature deficiency.
Intel's move now adds pressure on other WLAN providers to deliver on the GPS front. It remains to be seen if these other WLAN providers will be pro-active and find a way to support GPS in their future products.
The case of Sirf
Monday, July 30, 2007
SiRF, as I have briefly hinted in a previous article, like many other companies finds itself at cross-roads now. It has been the leading GPS chip-set maker supplying to almost all the major GPS vendors. Most Garmins and Tom-Toms that we would pick from store-shelves have SiRF inside. This being said, I wish to make a bold statement: SiRF will find itself marginalized and out of business if it does not diversify into other wireless technologies or strive to have a tie-up with a cellular or WLAN provider.
First and foremost reason is the recent spate of interest that the wireless companies have shown in small GPS firms. BroadCom, after surfing the waves for a while, decided to pick Global-Locate for its GPS needs. I am sure that other companies like U-Nav are up for grabs. Watch out for Marvell or Free-scale, as they are likely to pounce on such companies too if they come cheap enough. This puts SiRF with around $2 billion of market cap in a weird situation: While most of these wireless companies prefer to buy cheap and then build on it using internal resources, SiRF is too big to be acquired.
Secondly, is this concept of grabbing the most silicon in a platform. The wireless companies, with their own solutions, are likely to be better positioned to be able to achieve this than SiRF. SiRF will have to eventually come up with its own "bundle" if it has to be attractive to platform vendors. It has indeed made some strides with DVB-H and also media capabilities with the acquisition of Centrality. But, that still is only a limited number of eggs in its basket. Snapdragon, for example, offers DVB-H, SMDB and Media-Flo all in a bundle for the vendor to be able to pick-and-choose based on the market.
Thirdly, it is the "keep the Bill of Materials (BoM) low" thought. Any algorithm is good only to the point of making economic sense. SiRF's path-breaking algorithms are no longer attractive at the form-factor and costs being discussed in the mobile world unless it can leverage its technological leadership in the GPS field to always stay ahead. It would have to give a cheap and good product while also keeping the time-to-market low for the OEM.
Some may argue that all is not bad for SiRF. After all, its GPS expertise extends beyond mobile applications. The form-factors dictate algorithmic limitations with mobile phones, a situation not true for other devices. This, they argue, implies that the mobile GPS services are unlikely to supplant the market for the traditional GPS devices. My point is that technology as a whole is gravitating to a single device that can do most functions, not necessarily in an optimal sense. As an end-user, I would rather buy a single device that can do GPS, perhaps blue-tooth while along with being a cell-phone rather than buy 2 or maybe 3 devices separately. Note that I am not talking about having Wi-Fi and other data-related technologies that could further the attractiveness of such a unified device.
So, in summary, I think that if SiRF is not able to make strides in the mobile world in terms of getting a major customer or by diversifying, it runs the risk of being marginalized. If the future is in cellular mobile communications, and each cellular company has its own GPS solution, then it is only a matter of time before the concerted research and development of mobile GPS devices fructifies and begins to displace traditional GPS devices.
Integration - The wireless future
Thursday, July 19, 2007
A lot of the leading players in the industry have realized that their unique selling proposition (USP) may no longer lie in their original core competency area and have sought to accessorize themselves with other wireless technologies as well. More importantly, as the market matures, the margins available for the players are likely to fall drastically even if they have multiple technologies in their kitty. Thus is born a niche area: Integrated Wireless Solutions.
What do I mean by Integrated Wireless Solutions anyways? I am talking about the ability of the same wireless chip or card to support multiple technologies. Qualcomm's Snapdragon platform has 3G cellular capability along with GPS functionalities. Plans are on to incorporate WLAN and blue-tooth into this platform. The company is already pitching this as the ultimate dream-solution for any dream-phone. The idea is fairly clear, provide to the phone manufacturers, this all-in-all solution at a cost they cannot resist. This would result in a win-win situation with the chip-vendor also making more profit per unit sold, of course at the cost of other single technology providers who would consequently be marginalized.
The Qualcomm approach has been to have a cellular core around which all the other items can be added. Its nemesis, BroadCom, however has taken a top-down approach to get to the same place. Originally adept in WLAN, BroadCom has slowly expanded its portfolio to include bluetooth, added 3G with Zyray's acquisition, and most recently completed the set with the acquisition of Global Locate and its GPS solutions. Though BroadCom is behind perhaps in the design process, some careful planning can position it as a leading competitor to Qualcomm. Other WLAN majors have also pretty much taken BroadCom's approach but do not yet possess the complete capability to integrate.
What this means is that the other small and big semiconductor companies need to obtain access to these technologies, through internal development, acquisitions or through strong alliances.
Though I have briefly discussed integrated solutions in a fairly abstract form in this article, I intend to jot further ideas on effective strategies for different companies moving forward, the integration time-frame, logistics as time permits. Please also watch out for write-ups on the mobile GPS market, since the incorporation of Location-based services perhaps would be the most immediate of integration efforts to happen.
BroadCom's GPS move
Thursday, June 14, 2007
While the IP battle rages, BroadCom is slowly moving towards a more complete UMTS solution. It recently announced a $146+80 million acquisition of Global Locate, a GPS company. Now, they are equipped to enter the niche market of chips with integrated features. With previous Wi-Fi, blue-tooth and FM capabilities and with the new range of GPS products and IP from Global Locate, BroadCom's game would be to bundle all these with its UMTS chip, with the hope of shutting the other small players in the fragmented UMTS market.
As I have mentioned in a previous article, the company with the super-set of features is most likely to have a design win with a device manufacturer since the latter would want to build a single platform to support these chips. QualComm, for example, already has Wi-Fi and GPS assets from Airgo and Snaptrack respectively, and is thereby positioned as a front-runner in the race, especially with superior modems. BroadCom appears a little late in obtaining GPS but then we should remember that the company was getting its act together with the modem performance and interoperability testing earlier. With those issues likely out of the way,it is now attempting to carve a niche or at least is trying to become one of the top 3 UMTS IC supplier with a more complete product offering. Of course, it remains to be seen if the pace of QualComm's R&D efforts can be matched. While the industry is grappling to get the basic HSDPA act together, QualComm is already gravitating towards the next generation HS chips. BroadCom's hope perhaps is that the ITC ban will divert resources within QualComm thereby giving it some extra time to try and catch up with its bitter rival.
Also, it remains to be seen now what Marvell and Free-scale are thinking on the GPS front. They don't have GPS features as yet and there are not too many small companies to grab at now. Would they try to license from the $1.6 billion Sirf or are they likely to take the acquisition route? If it is the latter, the time is running out, both from an availability stand-point and a design-win stand-point. BroadCom is already making noises about making it to the top 5 UMTS IC suppliers. So we should see some more GPS deals soon. I also think that the window of opportunity for all the other players is getting smaller by the day and the weaker/financially poorer ones are likely to be left out. We will see market consolidation in this space and a few clear winners emerging. In the meanwhile, let us wait and watch the frantic action!
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