As the mobile chip business transforms from components to a full
platform business, “Our customers – handset vendors – do expect a lot
from us,” said Finbarr Moynihan, MediaTek’s general manager, business
"Full platform" means that chip vendors provide not just
working modem chips but also protocol stacks to go with every flavor of
modem standards, RF and power management solutions, CPU, GPU, media
processing and all the connectivity elements. Beyond chip technology
development, these mobile silicon vendors are also "expected to do full
Android software development," Moynihan added. To pull together all
these developments, the idea of a mobile chip company with 4,000 or more
employees seems less outrageous.
Of course, the financial
community might find it reasonable for MediaTek -- whose mobile chip
business happens to be performing well this year, especially in the
smartphone IC market in Asia – to keep that many employees. By the same
token, they might be less tolerant of such profligacy at ST-Ericsson and
A cautionary note: When you
strip a mobile chip company’s engineering team to the bone, you aren’t
just cutting cost. You’re likely taking away the tools the team needs
to compete in global markets.
No wonder Texas Instruments
chose to flee the mobile business. So did Analog Devices (its former
modem team is now a part of MediaTek), Infineon (whose mobile business
was acquired by Intel) and Freescale Semiconductor. It will be no
surprise if STMicroelectronics adds itself to this list.
clear that electing to stay in the price-competitive global mobile chip
business isn’t for the faint-hearted. The question is: Beyond Qualcomm
and Samsung, who else can remain in the business for the long haul.
Intel probably can.
For MediaTek, as it stands today, the answer is
As the cost of supporting all aspects of the mobile
business continues to pile onto the shoulders of chip companies trying
to sustain 4,000 to 5,000 people in a low, low margin business, something’s gotta to give.
No doubt ST's exit is a major blow to Ericsson. It would be very interesting to see who would want to partner with them now to fill ST's void. Or who knows, Ericsson will shut the handset modem shop altogether.
The point of the story is this: As more and more chip companies are asked to do everything from chip design to software development and designing a "platform," chip companies ought to get paid more or find another bis model ( or simply going out of business.) Especially in a highly competitive mobile chip world, this sure ain't looking sustainable.
ST-Ericsson have never seemed a solid company to me. They seemed a mish-mash of several divisions that were formed by necessity rather than some unique ideology such as what Apple have.
ST should be even more ruthless and define a very clear ideology of how they will re-dominate.
That was my original thinking...but then, when you think about all the other telecom operator-related stuff you need to do (beyond chip design)especially when the world has so many different cellular standards with different flavors, it suddenly dawned on me that this may be a business that NO chip company wants to be in. Seriously, it appears to require a lot of people to address the "global" cellular market.
Ideally, you would expect a product company to have solid engineering/management skills, but in most cases they have minimal skills and talent (focus more on profit margin and staying afloat and Wall Street expectations, no more focus on real enegineering talent), and so there are plenty of repeated mistakes along the way.
Maybe not so much lack of engineering skills, but maybe thinking in Europe needs to change. Clear out the banking type scandals, have smaller companies with less red tape, get the lazy off social life support/ welfare, and actually contribute (ie. Don't outsource to China at costs that don't allow them to produce quality, and then sell the stuff at German quality prices). Markups are too high in Europe or the UK (and Oz), so they will never be able to compete with Asian suppliers. Tax rates and the dole don't help either -- its that simple.
Join our online Radio Show on Friday 11th July starting at 2:00pm Eastern, when EETimes editor of all things fun and interesting, Max Maxfield, and embedded systems expert, Jack Ganssle, will debate as to just what is, and is not, and embedded system.