As predicted by RCR Wireless News at the Mobile World Congress event earlier this year in Barcelona, Spain, mobile processor maker Nvidia Corp. said it will acquire 3G/4G baseband chip maker Icera Inc.
The news is significant, because despite Nvidia’s success over the past year in piling up the design wins for its ultra-fast Tegra 2 processor, many felt that rival Qualcomm Inc. still held the edge thanks to its integrated baseband. By buying Icera, Nvidia will soon also have the capability to stick 3G/4G baseband onto the processor die, taking away Qualcomm’s key advantage.
Previously, only Broadcom, Mediatek and Qualcomm could integrate baseband onto their chips, but when Intel snapped up Infineon’s wireless business a few months back, and Renesas acquired Nokia’s baseband technology, saying it planned a major thrust into the LTE market, other players were forced to take a long hard look at the direction of chip evolution.
“Texas Instruments, Nvidia and Marvell should be worried,” analyst Jim McGregor of In-Stat had told RCR Wireless News recently when we asked him what a lack of baseband meant for mobile processor makers.
With Moore’s law mandating that more and more needs to be added onto chips with every generation, there has been a huge thrust in the direction of putting critical components onto the silicon, with many predicting that Wi-Fi and Bluetooth will also soon find themselves on the die.
The market for baseband processors is one of the fastest growing segments of the technology industry, worth an estimated $15 billion a year.
Icera has more than 550 patents granted or pending worldwide, and its high speed wireless-modem products have been approved by more than 50 carriers across the globe, making it well worth the proposed $367 million approved by both companies’ boards of directors. The Bristol, United Kingdom-based firm has a stellar reputation in the industry for engineering next-generation, multi-protocol wireless baseband processors with RF components and its technology scales from 2G to 4G networks.
Indeed, both firms are already apparently anticipating “significant revenue synergies,” from the deal.
By combining the Nvidia and Icera’s technologies and offering the two main processors used in smartphones (the application processor and baseband processor), Nvidia will be in a much better position moving forward in the mobile market. Once combined with baseband, Nvidia’s Tegra products will be highly attractive to OEM customers, as it enables them to improve their time to market, lower cost and increase their performance to power consumption ratio.
Nvidia’s CEO Jen Hsun Huang was quick to point out, however, that while integrating with Icera was a “key step in Nvidia’s plans,” his firm still intended to collaborate with existing baseband partners and respect customers preferences in combining application and baseband processors. For now, at least.
“Icera has the right team, with a strong, proven track record. And their nimble, entrepreneurial, engineering-focused culture mirrors our own,” he continued.
“This is a great move by Nvidia and opens the doors to almost any connected application as we as an industry strive to connect everything in a consumer’s life from our cars to our homes,” said In-Stat’s Jim McGregor, adding “And yes, this puts them in a great position to take on industry heavyweights like Qualcomm, Broadcom, and MediaTek.”
It could also mean that GCT and Sequans are now prime targets of acquisition for the likes of Texas Instruments Inc. and Marvell Technology Group Ltd., cash flow permitting.
