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

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

25th June 2012

Mediatek’s offer to buy MStar

Two compatriots for long at loggerheads have decided to join forces and take on the competition. News about Taiwanese chip designer MediaTek’s offer to buy rival MStar has created quite a buzz and water cooler speculation…. and of course the stock market. MStar was up 6.85 percent (maximum allowed in a session), while MediaTek gained 2.37 percent today.

My two cents’ worth addition to the buzz …..
- This acquisition will create the world’s fourth largest chip designer with total annual sales of US$4.2 billion in 2011

- The combined entity will have an almost 70% market share (a monopoly position??) in the TV SoC biz (DisplaySearch’s Q4’11 data put the two companies’ combined market share as 68.8%).

- Combined R&D resources and not looking over the shoulder for price cutting competition from the previous arch rivals can potentially sharpen the focus and product offering

- On the mobile phones arena: High end 3G smartphone chips along side the 2G ones for feature phones will consolidate & expand MediaTek’s mobile phone chip offering, especially in the emerging markets – more so in China where it has seen its once dominant position threatened by Spreadtrum and the likes (incidentally, MediaTek recently lost a TDSCDMA/WCDMA 3G chip socket in Samsung smartphone to Spreadtrum)

- And most importantly, it positions MediaTek well in an increasingly connected device market. With the growing convergence across platforms – TV, mobile phones, tablets/computing devices – it is crucial to integrate the relevant technologies across them so as to optimally and cost effectively leverage the same across the various platforms (Qualcomm announced a new Snapdragon for smart TVs and set top boxes in CES early this year and then at Computex later, it demonstrated its Smart TV reference platform with its quad-core Snapdragon S4 APQ8064 and MPQ8064 playing games and slinging TV frames. In E3 ’12 (Electronic Entertainment Expo), Samsung’s Smart TV included access to Nvidia’s new cloud gaming platform, GeForce Grid. Marvell too showcased its total solutions across Smart TVs, cloud computing and connectivity at Mobile World Congress)

- Concern: Talent retention/Integration of the combined work force. With almost 80% of MStar’s engineers doing the same work as folks at MediaTek, how will the parent entity avoid overlapping resources and address the potential loss (if not exodus) of talent?

posted in Semiconductor, Business, Communciation, Fabless, Industry Events, Mergers & Acquistions, 3G, MIDs, Samsung, Qualcomm, MediaTek, Spreadtrum, MStar | 0 Comments

26th July 2011

MStar & Mediatek vying for Nokia’s 2G biz??

What happens when two local companies fight for the same pie? And when that pie has a component from a “once market leader, now floundering handset maker”? And when one of the pie contestants is also gnawing the market share of this “once market leader, now floundering handset maker”?

Well, speculations abound!

MStar and Mediatek,the two Taiwanese chip makers for mobile handsets are vying for Nokia’s 2G phones’ biz - a volume estimated to be around 285 million in 2013.

Mediatek made its prolific rise in handset chip biz by supplying chips to the shanzai/white box handset makers in China. By doing so, it eroded Nokia’s market share in that segment (of course, the other end of the spectrum was eroded by Apple, Samsung and the likes!)

MStar steered clear from this segment and has supplied customized chips to Samsung and LG for higher end mobile phones. Perhaps, these will steer Nokia’s biz towards them…

Lately Mediatek has been shedding it’s “shanzai market” tag and moving up the value chain – Spreadtrum may have a lot to do behind this move!

Interesting times ahead for these sparring compatriots!

posted in Semiconductor, Business, Communciation, Fabless | 0 Comments

22nd July 2011

Spreadtrum acquires Telegent - Deja-vu??

Spreadtrum Communications, the fabless developer of baseband and RF chips recently announced its acquisition of Telegent Systems, a developer of software and silicon for the reception of live broadcast television signals.

While trolling the net, I saw this article that gives a quirky feeling of déjà vu. The article’s contents basically go on these lines….

In 2007, the US Wi-Fi provider and GPS manufacturer, SiRF bought Centrality, a company with navigation & multimedia experience. Later, SiRF itself got acquired by CSR. In hindsight, industry analysts viewed the Centrality purchase as a bad move.

Now the money/invested parties part …Centrality’s major investors included Walden International and it had a NEA (New Enterprises Association) principle on its BoD. An NEA principle was also on the SiRF’s board. Baseline appeared to be - sell the company to a public company and for enough cash that would return the VC capital and perhaps a large profit at the same time for the investors.

Move on to today…

Spreadtrum buys Telegent. Telegent shot into fame (and profits) with its analog broadcast TV. Since then, it moved to mixed signal and then to digital – a realm with intense price competition and very low margins.

Telegent’s investors include New Enterprise Associates and Walden International. Telegent’s CFO was once SiRF’s CFO. Spreadtrum has an NEA principle on Board….. you get the drift?

Will Spreadtrum do a SiRF???

posted in Semiconductor, Business, Communciation, Fabless, Mergers & Acquistions | 0 Comments

29th October 2010

Percello’s acquisition by Broadcom

Broadcom has paid $86m net of cash for Israeli femtocell IC specialist Percello in a bid to lower the BOM, and accelerate time to market, for its femtocell chip offerings. This comes close on the heels of acquiring the WiMAX prpovder, Beceem Communications.

The big fabless company’s acquisition does signify an endorsing of a real demand for femtocells. It is also now well positioned to take advantage of the relationship Percello has already cultivated with Ubiquisys, probably the number one in femtocell access point vendors.

Linley Gwennap, founder and principal analyst at Linley Group had correctly predicted in a talk to EETimes earlier -“The incremental cost of the femto function would be around $10. This could ultimately require the femto processor to integrate Ethernet and Wi-Fi as well as DSL or cable-modem. Broadcom is the obvious company to develop such a chip.”

Interconnectivity is getting more and more interesting! And hey, this is Broadcom’s sixth acquisition in Israel – and it already has 3 development centres there.

posted in Semiconductor, Business, Communciation, Mergers & Acquistions, 3G | 0 Comments

21st July 2008

Japan’s cellphone firms target senior citizens

In the land of the technical gizmos’ (especially cellphones) savvy a.k.a –the land of the rising sun, the cellphone firms are targeting the senior citizens. With the maturing of cellphone market for teenagers, companies do need another segment to sell their wares to; and countries with growing senior citizens’ population are an ideal target for the same. 

The combination of real need and marketing savvy could explain the high penetration rate of mobile phones among older Japanese. And success in this market can be replicated in other countries. As I cited in an earlier post (Nov ’06), I’ve found it rather strange why the cellphone vendors had not capitalized on this viable market segment  

 

posted in Business, Communciation | 0 Comments

16th January 2008

Cheap phones bring chip opportunities

There are 2 different markets for the handsets: feature-rich 3G phones and ultra low-cost (ULC) phones. The former is predominantly the developed countries and the developing countries form the latter.

According to ABI Research, “The developed markets’ high saturation rates mean that over 80 percent of new mobile phone subscribers in the next five years will come from emerging markets.”

These ULC handsets have changed the dynamics of business.

Using commoditized technology (read “multiple providers”), has given handset makers a wide array of vendors to choose from e.g. Nokia has moved from relying exclusively on TI for baseband chips to partnerships with STMicro, Broadcom and Infineon – thus providing it design flexibility as well as price negotiating power.

A fine example of a low cost phone is Tianyu 8811 which has achieved low costs by using proven, mature technology and adopting a minimalist approach. For a tear down on this product, I suggest to read Jeff Brown’s article 

The recently unveiled $2500 car (named Nano) from India’s Tata is a prime example of achieving low costs with minimalist approach

As cited by C. K. Prahalad, professor of corporate strategy at the University of Michigan Business School, a huge market awaits at The Bottom of the Pyramid.  

posted in Business, Communciation | 0 Comments

20th September 2007

2008 - Year of WiMAX ??

Mobile connectivity was the main thrust in the recent Intel Developer Forum. The company said its 45-nm Penryn-based Montevina processor technology due out in 2008 will be the company’s first Centrino processor for notebooks to offer the option of integrated Wi-Fi and WiMAX wireless technologies in an adapter code-named Echo Peak. This option would ensure customers do not necessarily need to make a choice between 3G and WiMAX.  Montevina also boasts the capability to run both HD-DVD and Blu-Ray for media applications. The new PCs and motherboards will be rolled out by Lenovo, Acer, Asus, Toshiba and Panasonic. Intel is investing with KDDI in a trial in Japan in addition to the well publicized trials by Sprint & Clearwire in the US.
 
In the old times, system providers used to put their bets on any 1 standard (amongst the few major competing ones) and come out with a product based on that standard and see how the market reacts. Now, they roll out products supporting all the standards (or at least the major ones) lest they lose out on the market share. So it is 3G and WiMAX, HD-DVD and Blu-Ray…….
 

I read this interesting article by Cliff Edwards in the recent edition of Business Week.

It talks about how Intel’s “Broadband Man” (EVP, Sean Maloney) garnered support from Samsung, Motorola, Nokia and Sprint to get this technology to its present state.

 

The key technology was obtained by Intel when it purchased a company called Iospan Wireless from a Stanford university professor Arogyaswami Paulraj. Maloney then went on to woo the industry heavyweights for this standard (AT&T had earlier, in 2000, tried a precursor to WiMAX in Project Angel. The project however was a non-starter because of lack of industry standard and support)

 

While Intel has declared 2008 to be the year of WiMAX, the technology and businesses built upon it still have a lot to prove and better & cheaper devices are needed to get to mass market adoption. However, several big companies have a lot at stake here and it does look poised to alter the communications landscape; or as Ottelini said: we are on the cusp of a new global network.

 

posted in Communciation, Technology | 0 Comments

28th August 2007

Infineon buys LSI Corp.’s mobility products biz

LSI Corp. has signed a definitive agreement to sell its mobility products business to Infineon Technologies for $450 million in cash, plus a performance-based payment of up to $50 million payable in Q1 2009. The sale does not include any production facilities. And about 700 LSI employees will join Infineon.
 

LSI’s mobile business involves mainly mobile radio baseband processors and platforms. While this signals a fabless step from LSI as well as a move towards shedding all its non core biz (LSI’s focus is storage & networking), it signals a larger move of consolidation in mobile communications and for Infineon specifically, this marks it’s strengthening hold in communications biz and its position at important mobile phone makers. It follows its recent acquisition of TI’s DSL CPE unit. 

 

There has been a recent commentary that this decision from Infineon is not technology driven; rather it is to tap on LSI’s customers for its baseband chips.  Now LSI’s top customer here is Samsung and although Samsung is a big client, it has also been losing share as 3G sales have increased; so this doesn’t sound entirely conclusive.

 

Also Nokia, which has a third of the world’s mobile phone market,  had recently announced that it would outsource all of its chip manufacturing to Infineon, Texas Instruments, Broadcom and STMicroelect ronics. This acquisition will strengthen Infineon’s position which is also recovering from the major setback of having insolvent BenQ Mobile as its largest customer.

posted in Business, Communciation | 0 Comments

9th March 2007

Cisco, IBM team up on open standards communication platform

Cisco and IBM are planning to develop a platform based on open standards to allow unified communications and collaborations in their applications. IBM will offer a set of application programming interfaces (APIs) as a subset of its Lotus Sametime collaboration software and Cisco will offer communication APIs for accessing voice and video services.
Cisco and IBM also will roll out “specific client offerings” based on the new platform and a set of “plug-ins” to combine the collaboration and unified communications capabilities of both companies.

I had written about the adoption of a similar approach in the EDA industry (Why can’t we do it in EDA). Especially with DFM and other UDSM challenges (and not to mention the standards’ war!), it is to the advantage of the designer if he can get the best of all tools in a unified integrated design flow. Since no single vendor can handle this on its own, a collaborative approach looks to be the best bet.

posted in Business, Communciation | 0 Comments

28th November 2005

Cisco turns to ZTE in China

While most other competitors foresee more growth in China, Cisco sees an edge in India and is investing heavily there. The things going for India include an unregulated economy, less competitive environment & a growing market . It’s worries in China include weaker IP protection laws and an edge to home grown local companies like Huawei, Harbor Networks etc. through loans and government support.

The Cisco-ZTE co-operation agreement will let Cisco take advantage of ZTE’s position in the local service provider market and it’s customer knowledge.

posted in Business, Communciation | 0 Comments

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