SHANGHAI, China – Spreadtrum Communications has emerged as one of China's hottest fabless companies, along with RDA Microelectronics, prompting talk here of a potential merger between the two.
Fueled by a rapidly growing demand for low-cost smartphones here and its 55 percent share of China's TD-SCDMA wireless market, Spreadtrum is riding high. Seeking a breakout for China's nascent fabless sector, observers here are even speculating about a potential Spreadtrum/RDA merger. Neither company, both based here, are confirming the rumors.
[Get ready for the
China Fabless Summit 2013, our Spring forum where Chinese startups will showcase their plans for the future of the electronics industry.]
Spreadtrum faces several challenges as it seeks to expand its global market share. Industry observers point out the keys to Spreadtrum’s next leap are the success of its pending WCDMA products and broader acceptance of Spreadtrum’s smartphone platform that includes an integrated modem/apps processor.
Spreadtrum’s true strength will be tested when the company ventures into the non-TD-SCDMA market and moves upstream into integrated baseband/apps processor smartphone platforms where it must compete head-to-head with MediaTek and Qualcomm.
The company is no stranger to portfolio growth given its acquisitions of Quorum and MobilePeak. But an even a bigger deal might be necessary if Spreadtrum expects to exceed a pattern of incremental growth.
Spreadtrum has been around since 2001, making it one of the most experienced fabless companies in China. It has already experienced several ups and downs, including early success with its first baseband chip. That was followed by an IPO the ultimately resulted in many lost customers, the resignation of its founding management team, then the arrival of a new CEO and almost a miraculous turnaround.
In August, Spreadtrum CEO Leo Li said the company expects to ship more than 10 million smartphone chip sets in the third quarter alone. Spreadtrum’s customers include Huawei, Lenovo, Hisense and others who have launched smartphones based on Spreadtrum’s products. Many of these customers are focused in the low-cost smartphones priced between 500 RMB ($79) and 700 RMB ($110).
At the high end of the TD-SCDMA market, Spreadtrum has expanded its business with first-tier OEMs. Its baseband and RF transceivers are now shipping in Samsung’s Galaxy S3 (TD-SCDMA version) and HTC One XT. Shannon Gao (right), Spreadtrum’s CFO, said during an interview with EE Times that Samsung’s Galaxy S3 design win stems in large measure to CEO Li’s connections with Samsung. Li is known for his affable character and his vast connections in the global cellphone industry.
A recent win with HTC was especially sweet for Spreadtrum’s engineering team. HTC had been working with Marvell on TD-SCDMA in 2011, but reportedly uncovered problems late in the design phase. HTC ditched Marvell and turned to Spreadtrum in March. Spreadtrum's challenge was to get HTC’s TD-SCDMA phone up and running by June, a deadline it beat by a month.
The entrance to Spreadtrum's Shanghai headquarters in Zhangiang High Tech Park.