Jun 13, 2011 (09:06 AM EDT)
Nvidia Adds Baseband Processors With Icera Acquisition
Read the Original Article at InformationWeek
Nvidia on Monday completed the acquisition of Icera, a producer of baseband processors for 3G and 4G smartphones and tablets.
The $367 million acquisition was announced in May. Now, Nvidia will leverage the acquisition to produce more integrated products for the OEM mobile market by producing the two most widely used mobile chips on the market--application and baseband processors. It will also help further Nvidia's position in the $15 billion-a-year baseband market--one of the fastest growing markets in the technology industry
"Over time we do believe selling these two components together will have a huge synergy for both businesses and increase our opportunity to sell Integra and also allow us to penetrate this new baseband market," said Jeff Herbst, VP of business development at Nvidia, in an interview.
Nvidia indicated that it expected no layoffs due to the acquisition and Icera will remain situated at its offices in the U.S. and Europe. While Nvidia has said it has no immediate plans to combine both processors onto a single integrated chip, Herbst said there is a possibility Nvidia may pursue this in the future.
By selling both Icera's broadband processors and Nvidia's Tegra application processing chips, Nvidia expects to streamline operations, improve time to market, and double Nvidia's revenue opportunity within each phone or tablet computer, Herbst said.
"Customers prefer to buy from one vendor to ensure all the software fits perfectly and everything is properly integrated--the OS is supported, the peripherals are supported--and clearly this gives us an advantage," Herbst said.
Nvidia's acquisition was an important move, as the mobile processing marketplace is consolidating and Nvidia is playing catch up, according to Gartner.
"It was almost a necessary move right now for Nvidia," said Sergis Mushell, principal analyst for Gartner, in an interview. "If you're going to combine applications processor with mobility, you need to have wireless connection technology, which is becoming something everybody is seeking. Otherwise somebody with a complete solution will come in and take away market share."
The acquisition helps Nvidia better compete against primary competitor Qualcomm, who already provides processing and modem chips for portable devices. Qualcomm and ST-Ericsson are expected to become the leading suppliers of cellular chipsets for LTE mobile devices over the next few years
Nvidia's competitors are primarily Qualcomm, Intel, and Broadcom, which have been busy snatching up complementary businesses to offer comprehensive phone technologies, including application processors, RS, wireless connectivity (Bluetooth, Wi-Fi, and GPS), and chips that combine the technologies.
The consolidation includes Intel's acquisition of wireless semiconductor company Infineon in August for $1.4 billion. In March, Intel bought Silicon Hive, a company specializing in parallel processing designs, to help with its multimedia processing. Qualcomm filled its wireless connectivity shortcomings earlier this year with the purchase of Wi-Fi chipmaker Atheros Communications for $3.1 billion. Qualcomm also purchased iSkoot, a mobile application services company. Also, Broadcom moved to stake out a position in 4G by acquiring Beceem Communications, a leader in LTE and WiMax wireless technology.
Icera shipped approximately 3 to 4 million baseband processors in 2009, which they believe gave them between 5 and 10% share of a roughly 45 million unit market for PC data, embedded data, and M2M modems, according to Strategy Analytics. Qualcomm led with a 90-95% share of the market in 2009.
Worldwide cellular chipsets will grow at a 9.3% compound annual growth rate from 2009 to 2014, according to IDC. While cellular broadband applications made up less than 7% of this unit volume in 2009, this market will grow at a 35% CAGR to account for over 16% of total chipsets by 2013, far outpacing the growth in the mobile phone market.
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