DALLAS — The CDMA silicon market has seen a long string of challengers run up the slope dominated by king-of-the-hill Qualcomm Inc. and then stagger back down, felled by the technical intricacies of code-division multiple-access technology. Now Texas Instruments Inc. is preparing for a charge, and analysts believe the chip giant may have a shot when it enters the market with a commercial cdma2000 chip set.
Executives speaking at the company''s annual analysts'' meeting here last week said TI will "very soon" announce plans for cdma-2000 merchant silicon that will begin sampling to customers next quarter.
Tom Engibous, TI''s president, said the commercial CDMA chip set was developed primarily by a group based in San Diego that came to TI two years ago with the acquisition of CDMA startup Dot Wireless Inc. TI is expected to work with partners for the RF and other portions of the chip set, but Engibous declined to identify them. He said the company''s Nokia business unit has separately developed custom silicon that Nokia has used for its successful CDMA handset business. TI "is putting everything in place to offer the CDMA market a more-integrated solution," said Gilles Delfassy, senior vice president of the company''s wireless-terminals business unit. "For TI, this is an untapped opportunity in a market wh'+'ere one company has ruled the roost," said Richard Kerslake, a director in the wireless business unit. Executives at Qualcomm (San Diego) declined to comment last week. A public relations staffer said the managers were tied up in meetings. Industry watchers last week predicted that the move could end what analyst Jon Peddie called "the chicken-and-egg problem" that has stunted the CDMA market thus far. TI''s entry "should break open the CDMA market" and provide for "affordable" silicon, said Peddie, who is president of Jon Peddie Research (Tiburon, Calif.). "TI will provide tough competition to Qualcomm, which has had pretty much a free ride in terms of pricing," said Allen Nogee, senior wireless analyst at In-Stat/MDR (Phoenix), who noted that CDMA silicon is now almost twice the price of a comparable GSM chip set. "In the end, the competition will be good for Qualcomm. For one thing, it will show that CDMA is not dying," Nogee said. "With their own 300-mm fab, TI can, in theory, have a lower cost than a competitor going through a foundry," said Will Strauss, president of Forward Concepts (Tempe, Ariz.). Qualcomm is believed to use IBM, which also is ramping 300-mm wafer production, as its main foundry for its CMOS digital baseband chip. CDMA technology has unlocked potential that stems from its more-efficient use of bandwidth than the time-division approach of the Global System for Mobile Communications standard, In-Stat''s Nogee said. "CDMA is a pretty nifty technology. The number of users is limited by the signal-to-noise ratio of the received signal, and the SNR could improve as better RF technology comes along." The cdma2000 standard is capable of a peak data bandwidth of 156 kbits/second, somewhat better than the data throughput of GSM. The wideband-CDMA standard developed by NTT Docomo and others is based in part on CDMA technology. One barrier to entry has been the inability of Qualcomm''s challengers to develop competitive chip sets. "CDMA is hard to do," Nogee said. As half a dozen companies in succession dropped out of the CDMA market, others flocked to the easier, but more crowded, playing field of GSM silicon. That brought down the price of GSM chip sets, Nogee said, while "Qualcomm had CDMA to themselves." The list of CDMA wannabes includes LSI Logic, which sold its CDMA license to Via Technologies (Taipei, Taiwan) last year, and Philips Semiconductors, which eventually offloaded the CDMA business it got when it acquired VLSI Technology. DSP Communications sold CDMA silicon to Kyocera and others for a time, but that ended when it was acquired by Intel. Prairiecomm Inc. (Rolling Meadows, Ill.) has had some success shipping CDMA silicon to Samsung Electronics, Matsushita Electric and other vendors, Nogee said.TI aims to capture increasing CDMA revenues by offering its own chip set. TI says its decision came in part because a number of existing GSM customers also participate in the CDMA-based handset market. Those customers have sought a competitive solution that would bring "integration, competition and diversity" to the CDMA market, TI''s Kerslake said. TI expects to avoid one cost burden that faces other CDMA players: patent-licensing fees. Alain Mutricy, vice president of TI''s wireless-terminals business unit, said that a cross-licensing agreement made two years ago means that TI will not pay royalties to Qualcomm. TI and Qualcomm swapped intellectual property, giving Qualcomm access to TI''s GSM patents in return for Qualcomm CDMA-related IP. "Quite clearly, there will not be a royalty stream on that chip set under the terms of our agreement," Mutricy said. Analyst Strauss said the patent cross-licensing deal would be another aid in TI''s effort to keep its costs below those of royalty-paying rivals. Forward Concepts estimates that 86 million CDMA baseband DSP chips for handsets shipped last year of the 425 million total, for about 20 percent of the world market, Strauss said. GSM and GSM/GPRS baseband DSP chip shipments were 285 million, accounting for 67 percent of the world market.