21st May 2013

How will ST’s new two product oriented business segments organization strategy pan out?

Georges Penalver, chief strategy officer for ST, told the analysts community recently that ST is being constructed as two product-oriented business segments organization. The first block encompasses ST’s sensor, power and automotive products and is essentially ST’s successful analog business and its digital automotive business. The second block is ST’s embedded processing business and is the non-automotive digital business including microcontrollers and processors for digital consumer applications.

 

Focusing on the Embedded processing segment and ST’s manufacturing strategy, let’s look into some statements from the earnings call last month:

·       The 1st segment i.e. Sensor, Power & Automotive represented 56% of net revenues and the 2nd segment (Embedded Processing Solutions) 44%

·       Wireless saw a significant decrease due to ST-Ericsson and this will continue. LTE Modem development activity and biz has moved to Ericsson

·       ST will not compete in the application processor market in smartphones

·       Microcontrollers are a key driver in the Embedded Segment; the others are STB (set top boxes), TVs, digital ASICs, Imaging etc.

·       ST will focus on 2 segments in Microcontrollers. The first one is wearable electronics (healthcare, automotive, gaming) where it caters to diverse and small size customers (requirement is for low power microcontrollers, sensors and connectivity). The second one is secure microcontrollers (which is more for smartphone applications (NFC), banking - both contact and contactless) catering to a smaller number of customers but for a likely high volume

·       Digital biz will be in 300mm wafer fab in Crolles

·       Manufacturing distribution in Crolles: 1/3rd each into MCU, CMOS image sensors and dig consumer products

·       ST is betting big on FD-SOI tech. It has second source agreement with GlobalFoundries for selected customers for this techno. Here it is working aggressively on 2 fronts – 1st is communication infrastructure where low power dissipation is important along with strong performance. The other is portable equipment (outside smartphones, tablets)

 

Add to that the fact that the major semiconductor growth (last year and projected this year too) are the mobile consumer devices especially smartphones and tablets as well as the wireless communication sector.

 

Keeping the above in mind, it will be a big challenge for the company to support leading edge technologies in Crolles and that too with an allocation of a third of its capacity for digital consumer products – case of an expensive leading edge digital technology without targeting aggressive margins. So, how ST can keep its IDM model, especially on the leading digital edge with this kind of a product segment organization strategy, economically viable – that’d be interesting to watch.

 

What are your thoughts?

posted in Semiconductor, Business, Foundry, Communciation, Blogroll, Technology, MIDs, chip design, connectivity, Mobile, STM, IDM | 0 Comments

1st April 2013

My analyst series - Qualcomm (QCOM)

Another one on Qualcomm (QCOM)

Lead in mobile integrated chipset and wireless – Snapdragon series, wireless technology patents/licensing
Announced CMOS Power Amplifiers alternative to GaAs PAs for mid-high tiered 3G/4G smartphones

China market focus
- Well positioned to ride on China Mobile’s LTE wave (China Mobile announced spending $6.7b in 4G tech this year)
QCOM chips were in 14 of the 31 terminals selected for trial by China Mobile in Dec ’12 - nearest rival with 4 was Sequans.
- Biz model with local mobile chipset design companies and the system/handset manufacturers for licensing royalties

Major Revenue segments – licensing and sales
While in the last couple of years, QTL’s revenues were higher than that of QCT, QCOM is looking at double digits growth for both biz segments and QCT’s growth to be substantially higher than that of QTL.

Strong focus & investment in R&D
R&D in Q1 fiscal 2013 was 1.1B (18% of revenues)

Vertical integration for mobile eco-system
- Accelerating the commercialization of its Pixtronix MEMS displays using Sharp’s IGZO tech – Note however that the deadline for giving Sharp the 2nd half of $120m investment from QCOM has been extended now to June (due to some specs conditions not being met by Sharp)
- Ride on Internet of Things: Amongst others - Alljoyn and FlashLinq
- Moving beyond devices into wireless backhaul – DesignArt acquisition last year

Strong Financials
- Q1 ’13 earnings: $6b quarterly revenues (a 29% y-o-y increase), $1.91b profit (36% increase over previous year)
- Full-year revenue guidance to a range of $23.4 billion to $24.4 billion from its previous target of $23 billion to $24 billion.

posted in Semiconductor, Business, Fabless, 3G, Qualcomm, Ecosystem, Internet of Things, IoT, chip, connectivity, Mobile, 4G | 0 Comments

28th March 2013

My analyst series - Intel (INTC)

Going through some of the equity research notes, apart from the contents, one of the things that struck me the other day was the brief succinct way the main content is put out. And so, I thought, why not do a series with my take on some of the stakeholder companies and application markets in the semiconductor eco-system. Appreciate your feedback, comments, thanks!

So here goes the first one…

Intel (INTC)

Intel’s technology lead
- Pros: Increased capex to maintain the lead (at least 2.5 years ahead from competition), Intel’s stake in ASML for 450mm and EUV R&D
- Cons: The increased capex that could also result into high end fabs running under capacity. Intel needs to monetize its leading edge technology and also needs numbers and breadth of various types of chips to be fabricated in its fabs in order to fine tune its processes.
- As per IC Insights, Intel’s forecasted capex for period 2010-2013 is $40b, second to Samsung’s ($46.9b) – together to account for 42% of the total industry

Intel’s foundry principle seems to be - Open Intel fabs for non-Intel chips but not for competing chips (“chips for mobile biz”). Altera deal is seen as step forward. However, point to be noted is that while (reportedly) this deal does not allow Intel to let other FPGA vendors (Xilinx?) on its 14nm fabs, Altera can still continue to work with TSMC and others. Second source foundry options may not reel in 100% of Altera’s total fab requirements to Intel

Semiconductor growth drivers and Intel’s market share in it
- Slowing down/Cannibalizing of PC biz (Intel’s main revenue generator)
- Mobile chips being the major driver now for semiconductor growth and Intel’s not too effective efforts till date in this space.

• However lately, we are seeing Intel making good in-roads in this space. Mobile biz requires connectivity plus good power management solutions besides the performance factor. Two announcements from Intel this year point positively in this direction – Dialog deal (for power management in its Bay Trail (22nm)) and XMM7160 (multimode, multiband 4G LTE global modem solution) for an integrated SoC solution end 2013/early 2014.

posted in Semiconductor, Business, Technology, Intel, Ecosystem, chip, connectivity, Mobile, Power | 0 Comments

27th February 2013

Qualcomm and Internet of Things (IoT)

So, is connectivity to internet necessary for all smart connected devices/applications? A lot depends on the application; for example in a multiplayer gaming app with players physically in the same room, a peer-to-peer network without connecting to the net can do. Qualcomm’s AllJoyn software and FlashLinq are a good fit in this space.

AllJoyn debuted last year and Qualcomm announced the extension of this to new core interoperable services at the Mobile World Congress this week. An application, in its present avatar, it may soon get integrated into the firmware for consumer electronic devices by their manufacturers, should the wave catch on.

And once that happens, I believe Qualcomm would like to see FlashLinq (their peer-to-peer PROPRIETARY technology) too get entwined into this. For while AllJoyn will run across various hardware platforms, AllJoyn apps will be able to run directly over FlashLinq without using Wi-Fi/Bluetooth etc. So if AllJoyn takes off in a big way, we can also look at chips with FlashLinq integrated within them flooding the market – another licensing revenue generator for Qualcomm.

posted in Semiconductor, Qualcomm, Internet of Things, IoT, Internet of everything, chip, connectivity | 0 Comments

14th February 2013

Internet of Things (IoT) and the opportunities for chip biz

There has been a lot of talk on Internet of Things (IoT) or Machine2Machine (M2M) communications – which basically is an intelligent grid of devices connected to each other through the internet. Chips are embedded in the devices enabling them to relay information, take decisions, communicate commands and adjust settings/implement a requisite action(s) accordingly.

As per a report from ABI Research, over five billion wireless connectivity chips will ship in 2013.

What does this mean for the chip biz?

Some basic things that various devices involved in this IoT will include are: wireless connectivity (mostly low power unless one or more of these devices is connected to the mains), sensors, MEMs and control units.

The control units here needn’t be too fancy – efficient and sufficient enough to do the task they are assigned for. They span from low end to high end depending on the computing power required for the control functions - served by MCUs, embedded processors. The sensors (for temperature, pressure, moisture, light etc.) are coupled with accelerometers, gyroscopes and the like.

Connecting to the internet – wirelessly and power efficiently – that will be the key for connectivity stake holders in this space. Nuel has come up with an interesting way to achieve this. It recently announced a white space (unused frequencies during TV channels’ transmission) radio chip for low power communications and come out with a chip to demonstrate the same (it implements the “Weightless’ specifications)

One thing I find interesting about IoT/M2M is that it does not have any defined market space/application. There are potentially several applications, several markets where these can find their way. So, while one can chose to specialize in servicing one market/application, a choice of providing a generic chip/platform (control/sensor/connectivity) for any or combination/integration (SoC) of the components of the basic fabric for any (or at least most of the applications) is also wide open.

However, for the application to catch on, it has to be implemented in an inexpensive way and should be easy to use - and that is where we’ll see some exciting innovation & integration happening

posted in ASICs, Semiconductor, Business, Communciation, Technology, Hardware, Ecosystem, chip design, Market trend | 0 Comments

15th January 2013

Some promising application markets for semiconductor biz in 2013

Communication and Consumer Electronics appear as the most promising application market segments for 2013. And within that, portability and wireless connectivity are set to be the main growth drivers for the semiconductor industry.

The other promising markets for 2013 are automotive and medical.

Portability has brought in an increasing importance of power management. Demand for power efficient and high performance solutions in portable devices will continue driving the need for power management ICs - and these represent a significant part of revenues from analog IC vendors.

The rapid growth of wireless applications and the incorporation of computing into communications (e.g. smartphones) and vice versa (e.g. media tablets) is likely to continue in 2013. While smartphones have been the main growth driver in the wireless application, the market also includes all semiconductor content needed for communication infrastructure, equipment etc. The proliferation of 4G, an increasing use of fibre coupled with an increasing data traffic need will catalyse this application market segment. In addition, semiconductors have proliferated beyond the traditional wireless and computing applications, e.g. mobile commerce.

The rise of M2M communications/Internet of things will also provide long term opportunities for wireless communication chip makers. These will span a broad range of applications across automotive, industrial etc. Intelligent, connected, and energy-efficient systems (with sensors and motors being wirelessly connected) will continue leading to higher semiconductor content.

The increasing sophistication of the mobile devices has led to not only increasing semiconductor content but also its varied usage. The traditional content of baseband and RF has morphed into multicore application processors, connectivity supporting various spectrum bands, sophisticated graphics and video, touchscreen displays etc. And the tidings will cascade across the complete semiconductor supply chain supporting these applications. This includes market for components like sensors, displays, power management, MEMs etc.

2013 will also see MEMS becoming a part of mainstream semiconductor content. From gyroscopes, accelerometers, and microphones, they are finding an increased penetration into devices spanning multiple industries and applications – consumer electronics, mobile devices, medical, automotive, aerospace etc. Its growth will be seen through an increased on board processing and integrated and self-contained sensing units.

On sensors, Internet of things is also likely to drive a huge market for low power, cost sensitive sensors. Innovations here are also reshaping the medical imaging industry. While this market is currently evolving, the emerging technologies and products in this space are likely to go main stream with a high potential.

Medical electronics is another promising market for semiconductor. The increasing aging population, increased life-span and various life style related illnesses are spurring the demand here. Medical devices now warrant small and smarter technologies – coupled with wireless connectivity.

Automotive has also seen an increasing amount of electronics. Automotive infotainment, safety, fuel efficiency and enhanced features is making this application market very promising for semiconductor content

posted in Semiconductor, Business, Forecasts, Analog, Automotive | 0 Comments

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