Chipmakers continue to stake claims in anticipation of an assured industry upswing.
Bellwethers Intel Corp. and Texas Instruments Inc. offered optimistic second-quarter projections, reinforcing a view that the sector has seen its worst days. In separate filings with the Securities and Exchange Commission, both companies said they would experience good second-quarter margins. Intel expects a 50-percent margin, while TI anticipates 7 percent sequential revenue growth.
Texas Instruments also said it would expand its CDMA efforts. Although TI is the largest supplier of chips for wireless handsets, the company only makes chipsets for GSM phones. TI would not elaborate on its CDMA plans, only saying it is the right time to enter the CDMA arena.
Memory chips also have snagged attention in the space. Cypress Semiconductor Corp., Infineon Technologies AG and Micron Technology Inc. rolled out samples of their 32-Megabit CellularRAM devices for wireless handsets. The three companies had agreed last year to develop specifications for the products.
“The cellularRAM architecture is our answer to handset designers’ demands for a faster, more efficient, and simpler design in a high-throughput memory subsystem,” said Mario Fazio, Micron’s director of marketing for wireless products.
Meanwhile, Samsung Electronics Co Ltd. bared its chip muscle in a plan to invest $500 million to upgrade its dynamic random access memory plant in Texas. Samsung’s new plant will give it leverage against rivals Micron and Hynix Semiconductor Inc. Samsung said it plans to spend up to $2.7 billion on memory chips this year.
But the biggest chip battle taking place is for control of the application processor market. Motorola Inc. recently showcased its Microsoft CE .NET on its i.MX applications processors. Consumer electronics company Tapwave Inc. selected the Motorola chips for its entertainment products.
Motorola’s showcasing of its i.MX processor is perceived by some industry watchers as part of a plan to regain its top spot in the application processor space. Motorola had an opportunity to shut the door to competition with its DragonBall 68000 with Palm, but the company did not take advantage of its position, say industry experts.
So the space, which provides handsets and other wireless devices with such services as PIM, Web surfing, video telephony, audio, e-mail, 2D and 3D graphics and games and other multimedia services is now wide open.
Tim Shelton, senior analyst with Allied Business Intelligence, said the debate lies between those who want to provide the solution as a standalone offering and those who want to integrate them. “Application processors provide potentially the largest growth area in the chip space,” he said.
Handset makers have to decide if they want one chip to cover all or separate chips for different applications.
But Motorola thinks it is on track with its i.MX processor, which it can enhance with its licensing deal with ARM.
“The i.MX processor has the best balance of performance, battery and a high degree of integrated features, along with the ability to drive the dynamic applications we plan to offer,” said Tapwave Chief Executive Officer and founder Peng Lim.
The company believes it is now positioned to play key roles not only with Palm, but also with PocketPC and Linux operating systems, according to Ed Valdez, director of platform marketing at Motorola.
But Motorola’s place is not that assured, said Prakash Agarwal, president and CEO of Neomagic, which is just launching its application processors.
“The market is dominated by TI at this moment,” said Agarwal, listing other companies like Intel, STMicroelectronics and Samsung as good competitors. “Having a good relationship with ARM does not confer advantage; it is what applications do to differentiate you that matter.”
TI’s position arises from its pre-eminent position in handsets at the moment. With Its OMAP platform, it hopes to continue that dominance. Intel would not be left out with its Centrino and Xscale platforms.
