Samsung Joins Mobile Chip Venture in Japan
By Mark LaPedus, SemiMD senior editor
For some time, Qualcomm Inc. has dominated the baseband or cell-phone chipset market. Others are also competing in the baseband market, such as Broadcom, Intel, Marvell, MediaTek, Renesas, Spreadtrum, ST-Ericsson and TI.
Now, there is a new wrinkle in the arena. Japanese telecommunications giant NTT Docomo Inc. has reached an agreement with five companies — Fujitsu Ltd., Fujitsu Semiconductor Ltd., NEC Corp., Panasonic Mobile Communications Co. Ltd. and Samsung Electronics Co. Ltd. — to establish a fabless joint venture company to develop and sell semiconductor products for mobile devices.
The big surprise is South Korea’s Samsung, which has not been part of Docomo’s major partnerships in the past. Missing in the group was Renesas, a long-time cell-phone chip partner with Docomo. Instead, Renesas is forming close ties with Nokia.
The joint venture company, to be formed by the end of March of 2012, will develop semiconductor products equipped with modem functionality for the LTE and LTE-Advanced mobile communications standards. The venture will leverage the six investing companies’ backgrounds in cellular communication technology, ASICs and foundry manufacturing.
Following the basic agreement, and as part of preparing to form the joint venture company, Docomo plans to invest 450 million yen ($5.8 million) to establish a subsidiary, called Communication Platform Planning Co. Ltd. The unit is headed by Mitsunobu Komori, executive vice president and chief technical officer of Docomo. Komori will become CEO of the unit.
Will Strauss, president of Forward Concepts, a research firm, believes the new venture will become a captive — not a merchant — player. The venture will devise cell-phone chips for the mobile phone units within Fujitsu, NEC and Panasonic. Docomo primarily sells these cell phones in Japan.
There are still more questions than answers in the new venture. Docomo-branded LTE cell phones, which are built around a baseband solution from Fujitsu, have been shipping for a year or so, Strauss said.
“I believe that Fujitsu fabbed Docomo’s current LTE baseband, (which) is shipping in phones by Panasonic, Fujitsu, etc. That baseband is based on licensed Tensilica DSP cores,” Strauss said.
Now, Samsung is in the mix, which is raising some eyebrows. “Samsung is currently using Ceva DSP (cores) in their LTE basebands,” Strauss said. “So it’s unclear whether Samsung is jumping ship to Tensilica or perhaps the entire group is looking at going another route (maybe Ceva) for their next-generation LTE basebands, called LTE-Advanced,” he said.
In any case, Samsung will likely provide foundry manufacturing services for this venture, especially at the leading-edge. “Samsung has a world-class foundry,” he said. In contrast, Fujitsu, the current foundry in the group, could be limited in making chips at the 40nm node. Beyond that, Fujitsu must resort to foundries like TSMC and others for its production needs.
Missing from the Docomo group is Japanese chip giant Renesas Electronics Corp. At one time, the company had close ties to Docomo as a cell-phone chip supplier. But recently, Renesas acquired Nokia’s ASIC/baseband business. At the same time, Renesas spun off that ASIC/baseband unit into a separate entity. Renesas, as well as Broadcom and ST-Ericsson, are shipping baseband chips to Nokia.
In any case, all vendors are trailing Qualcomm. According to Strategy Analytics, Qualcomm — with 41.7 percent revenue share — ranked number one in baseband chips in Q2 2011, followed by Intel, MediaTek, Texas Instruments and ST-Ericsson.
Qualcomm is shipping basebands to Apple and others. “Qualcomm has an excellent opportunity to benefit from the market transition from 3G to 4G cellular technologies as more phones use 3G and 4G radios (multi-mode radios), resulting in higher chip content, and given a shrinking competitive field with only ST Ericsson, Intel/Infineon, Broadcom, and Marvell real competitors at this point,” said Craig Berger, an analyst with FBR, in a recent report.
“Clearly (Qualcomm) is heavily investing in 3G and 4G technologies with an expanded product offering of baseband modem and integrated baseband/application processor solutions,” he said. “Qualcomm is focused on LTE solutions at 28nm, discussed increased efforts in TD-SCDMA basebands, and plans on pushing Snapdragon or lower-end solutions into end markets including computing, high-end smartphones, mainstream smartphones, feature phones, and even data card solutions.”
Qualcomm’s ARM-based Snapdragon is an integrated solution, which combines the baseband and an application processor on the same die. As smartphones and tablets move towards video and gaming applications, there is a push towards multicore application processors, Forward Concept’s Strauss said. Over time, some 60 percent of all smartphones will make use of an integrated solution, he said.
Multi-core smartphone application processors gained traction in Q3 2011, accounting for almost 25 percent of total smartphone applications processors shipped in Q3 2011, according to a recent report from Strategy Analytics. This growth can be attributed to strong holiday quarter demand for flagship multicore smartphones from major smartphone manufacturers.
According to Strategy Analytics, Samsung’s multicore applications processors for smartphones led the market with 57 percent unit shipment share in Q3 2011, followed by Qualcomm with 18 percent. Texas Instruments and Nvidia were next in the rankings. Samsung benefited from making the application processors on a foundry basis for Apple.
