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CEVA's good fortune: How long will it last?

Posted: 09 Jun 2009     Print Version  Bookmark and Share

Keywords:DSP core  semiconductor IP  base band processor  base band market 

Nokia is not alone. Many leading handset companies are similarly dependent on "a variety of chip suppliers" for base band processors, said Wertheiser. "Each semiconductor company has its own specialisation," for a different base band, he added.

CEVA has also profited from TI's recent decision to exit the merchant base band processor market.

Forward Concepts' Strauss noted, "Since TI's market share will go to zero by 2012 (by their own admission), that's likely to move CEVA up to the #2 base band spot." He also added, "Nokia is currently shipping a number of 2G cell phones that employ CEVA-integrated base bands from Infineon and Via Telecom, rather than those from TI."

TI will, however, continue shipping 3G base bands to Nokia, at least through 2011, he noted.

While agreeing that the rapidly changing mobile handset landscape has worked in CEVA's favour, Jeff Bier, president of Berkeley Design Technology, Inc. (BDTI), noted that "to say CEVA is the biggest beneficiary is an overstatement."

Bier said that Qualcomm, for example, has been making steady inroads in the base band market, at a time when traditional DSP power houses such as TI or Analog Devices have all bowed out, calling it highly commoditised. Qualcomm continues to design and make its internally developed base band and application processors. Further, Bier added, "Qualcomm is using its own DSP, not that of CEVA."

Market exit
Did any of those big DSP companies make a mistake by retreating from the base band market too soon?

Bier said, "There is not much room for debate on base band processors having been extremely commoditised. Even if it offered potentially a lucrative opportunity, it would require too big an investment "money and talent."

Strauss offered some background how the base band market got so commoditised.

"Actually, MediaTek (initially a spin-off from silicon foundry UMC) was able to undercut TI, ADI, NXP and others in 2G base band and transceiver pricing for the China's cell phone market," said Strauss. Some speculated that favourable wafer pricing from UMC (at least in MediaTek's early stages) gave them the edge over others. "This killed profit margins for all of the others, causing TI to ultimately abandon that segment of the market. And, of course MediaTek purchased ADI's cell phone chip product line, too."

This makes today's base band market very fragmented, leaving it to a fewer DSP core suppliers.

But today's trend doesn't necessarily dictate the base band market of tomorrow. Although decisions made by TI and ADI make a lot of sense (existing from the base band market for handsets), Bier said, "there is one caveat." He asked, "How long will base band and application processors remain separate, especially for high volume, cost sensitive handsets of the next generation?"

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