WiMAX chip biz to be a tussle

The abundance of venture capital for new mobile technologies such as mobile WiMAX chips has created more companies than can survive in the space, according to Mike Thelander, principal at Signals Research Group L.L.C.
“It’s hard to foresee positive return-on-investment for many companies,” said Thelander. “From an investor’s point of view, that’s scary news. From the WiMAX industry’s perspective, that’s good. You see the same situation playing out right now in the 3G chip market. As in 3G, you need those high-volume customers with significant market share to survive.”
The companies that don’t succeed in winning those relatively few, high-volume customers may get bought for their IP and engineering expertise, they may attempt to leap-frog to other OFDM technologies or they may simply flame out.
The ownership of IPR in WiMAX chips is indeed more widely dispersed than in 3G, a situation that actually introduces “more uncertainty” than in 3G, according to the semiconductor analyst. Licensees could be better or worse off than the 10% average they pay per handset in the 3G space.
Companies and their shareholders will seek to monetize their IP holdings in the space, especially if they are not participating directly in it, according to Thelander. “If every company gets their fair share of royalties, you could be worse off (as a licensee),” Thelander said.
Sprint Nextel Corp.’s vision of each American consumer perhaps owning a family of devices, each bearing a WiMAX chip, is “a big vision for selling lots of WiMAX chips,” Thelander said. In contrast, consumers in developing countries without wired broadband access are likely to purchase one device-and thus only one chipset is needed-to bring broadband into the home.
“There are opportunities for both scenarios,” said Thelander. “Sprint’s vision, obviously, holds more advantages for chipset suppliers.”
Companies such as Beceem, which seeks to deliver more functionality along with its WiMAX baseband chip by adding a radio frequency component, are taking a more challenging path, according to the chip analyst.