Linley on Mobile
Volume 1, Issue 10
August 31, 2009
Independent Analysis of Semiconductors for Mobile and Wireless
Editor: Linley Gwennap
Contributor: Joseph Byrne
In This Issue:
- ARC Enters Virage
- i.MX233 Uses SigmaTel Technology
- Handset Market Bigger Than Expected
- News in Brief
Our new report Mobile & Wireless Semiconductor Market Forecast 2008 - 2013 is now available. Get complete five-year unit and revenue forecasts for all types of mobile processors, connectivity chips, and IP. For more information, check our web site.
ARC Enters Virage
Earlier this month, ARC International announced that it would be acquired by Virage Logic. Virage supplies a variety of comparatively low-level IP that complements the CPUs and audio software ARC has supplied. Virage is paying ARC's shareholders a 38% premium over ARC's market cap. Publicly traded since 2000, ARC has never posted a profit and has had a tough 2009.
In recent years, ARC had shifted its emphasis from supplying CPU IP for diverse applications to supplying audio products that combine software, codecs, and hardware. We believe that processor IP companies should increasingly focus on delivering products tailored for specific vertical markets. The audio market is highly competitive, however, and ARC had limited resources to subsist on until this strategy could bear royalties. This vertical strategy had been led by the company's previous CEO, Carl Schlachte. He was replaced in May, and new CEO Geoff Bristow has focused on cost reduction in an effort to spruce up the company for sale as much as to cope with market conditions.
Because Virage's IP is broadly applicable, the company may be tempted to abandon ARC's vertical-market approach and focus instead on marketing ARC CPUs as general-purpose IP to Virage's diverse customers. This strategy would enable Virage to cut costs but would position ARC as a low-cost alternative to MIPS, PowerPC, and ARM, the strategy that kept ARC profitless for its history. --Joe
Complete coverage of ARC appears in our report A Guide to CPU Cores and Processor IP.
i.MX233 Uses SigmaTel Technology
This month, Freescale announced the i.MX233, its first processor to combine the i.MX with technology from last year's SigmaTel acquisition. SigmaTel's ARM-based products appeared mainly in MP3 players and low-cost PMPs, and the new i.MX233 targets similar markets. To minimize system cost, the new chip integrates a complete power management unit (PMU), including voltage regulators, a battery monitor, and a temperature sensor. It also includes analog audio input and output. Other i.MX processors require a separate companion chip for these functions.
From the i.MX line, the chip gets a ARM9 CPU that operates at up to 454MHz, fast enough to display video on modest-sized screens. For sophisticated PMPs, the processor includes a touch-screen controller. It also integrates the USB PHY, to reduce cost, and analog TV output. This highly integrated device carries a list price of $5 to $7, with lower pricing in high volume. It is already sampling and is due to enter production in 4Q09.
Although i.MX has had some success in high-end PMPs such as the Toshiba Gigabeat and the original Microsoft Zune, it has not been able to penetrate high-volume PMPs due to the relatively high cost of its solutions. Taking advantage of the mixed-signal design skills of SigmaTel's engineers, Freescale has developed a low-cost processor for the broader PMP market. The i.MX233 is also appropriate for e-books and other mobile devices with modest performance requirements. We expect Freescale to use its new mixed-signal capabilities to improve the competitiveness of i.MX across the board. --Linley
Additional coverage of i.MX products appears in our report A Guide to Mobile Processors.
Handset Market Bigger Than Expected
Conventional wisdom states that about 1.2 billion cell phones shipped in 2008, with 80% of these units coming from the so-called Big Five handset makers: Nokia, Samsung, LG, Motorola, and Sony-Ericsson. According to The Linley Group research, however, 1.43 billion cellular baseband chips shipped in 2008, almost all into handsets. These numbers simply don't add up.
We believe that most handset-market estimates are missing the large number of unlicensed handsets produced in China. These "shanzhai" phones are produced by many small suppliers, some even operating out of apartments. This market is largely supplied by MediaTek, which provides complete handset chip sets and reference designs to the shanzhai vendors. After accounting for MediaTek's shipments to licensed handset makers, we estimate the size of the shanzhai market in 2008 to be 150 million units. This estimate corresponds with reports from others who have studied this phenomenon.
As a result, we believe the entire handset market last year was 1.36 billion units. This figure breaks down as 71% from the Big Five, 18% from second- and third-tier manufacturers, and 11% from the shanzhai makers. Again contrary to conventional wisdom, the market share of the Big Five has been declining rather than growing. This decline is due to rapid growth in shanzhai shipments, which were only 20 million units per year as recently as 2005. Shanzhai growth slowed in 2008, however, because the market for cheap phones is becoming saturated. We forecast future shanzhai growth at 8% per year (CAGR) through 2013.
Using these handset numbers, the baseband math works much better. After accounting for data cards and embedded devices, we calculate a total of 1.41 billion cellular devices shipped in 2008. Normally, due to wastage and inventory expansion, the number of baseband chips shipped in a given year exceeds the number of cellular devices by 5% to 10%. In late 2008, however, handset makers reduced inventory, fearing a market meltdown. This reduction hampered growth in 2008.
For 2009, we forecast baseband chip shipments to decline by only 2.5%, despite the down handset market. This forecast assumes restocking of inventories, growth in the shanzhai market, and improving economic conditions in the second half of the year. Through 2013, we forecast average growth of 6.1% per year, bringing total baseband shipments to 1.923 billion in that year. Although the handset market itself will grow more slowly, additional baseband growth will come from cellular-enabled PCs, netbooks, e-books, navigation devices, handheld gaming devices, and similar products. --Linley
Complete unit and revenue forecasts for cellular baseband chips appear in our recent report Mobile & Wireless Semiconductor Forecast 2008-2013.
News in Brief
Using Intrinsity technology, Samsung has pushed a Cortex-A8 CPU to 1GHz in 45nm LP technology. The new Hummingbird design operates its CPU about 25% faster than ARM's standard A8 implementation, according to our estimates. To achieve such high frequencies, Samsung teamed with Intrinsity, using the Texas-based company's speedy domino-logic technology in critical paths of the CPU. Samsung has yet to announce any chips using Hummingbird. An application processor combining the speedy Hummingbird CPU with rich graphics and multimedia capabilities would position Samsung to take share from market leaders Texas Instruments and Marvell. --Joe
Complete coverage of Samsung's application processors is available in our report A Guide to Mobile Processors.
Tensilica has introduced a low-cost DSP core, the Connx D2, that is appropriate for voice-over-IP (VoIP) applications. The D2 has two 16-bit MAC units that can be accessed via either SIMD or two-way VLIW instructions. The latter enables the two MACs to perform different operations in the same cycle or for the processor to issue one instruction (including SIMD instructions) to the DSP ALU and one to other function units, such as the load/store unit or scalar ALU. The D2 occupies as little as 0.18mm2 in a 65nm process and operates at up to 600MHz. Tensilica touts the D2's suitability as a C-compiler target and has also implemented a library of signal-processing primitives from Texas Instruments. To further ease customers' use of the DSP, the company also offers ITU primitives. Producing a processor specific to a single class of design and supporting it with software, Tensilica is seeking a logical path toward profitable growth. --Joe
More information about Tensilica processors is available in our report A Guide to CPU Cores and Processor IP.
About Linley on Mobile
Linley on Mobile is an electronic newsletter published once or twice per month by The Linley Group, a technology analysis and strategic consulting firm. Linley on Mobile will present our analysis of recent news regarding semiconductors for mobile and wireless. For more information on this and other topics, visit our web site.
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Copyright 2009, The Linley Group