NEW YORK – After warnings last week of falling quarterly sales stemming from weak PC demand, Marvell Technology Group sought to change perceptions about the company’s prospects that one analyst called “less than inspiring.”
Countering several financial analysts who have downgraded Marvell, co-founder Weili Dai stressed in an interview that Marvell is ready for the coming “super-integration era” of storage (controllers for solid state drives), connectivity, video, 3-D graphics and modem technologies for Ultrabooks, tablets, smartphones and smart TVs. According to Dai, not even rival Broadcom has the “ingredients” necessary for broad range of future smart devices.
Dai stopped short of providing specifics as to when she expects the so-called “super-integration” era to start contributing to Marvell’s bottom line.
[Get a 10% discount on ARM TechCon 2012 conference passes by using promo code EDIT. Click here to learn about the show and register.]
Sticking mostly to company talking points, Dai (right) cautioned against betting against Marvell – especially the company’s staying power. “We don’t live by quarters. We are here to stay [for the] long term.”
She noted that Marvell has rebounded several times in the past, proving naysayers wrong. Among the examples: Marvell’s entry into the cut-throat HDD controller business 17 years ago; its decision to buy Intel’s XScale processor division in 2006; and development of its own TD-SCDMA modem chip.
Marvell also stresses its leading position in SSD controllers which will become an important ingredient in a range of products beyond Ultrabooks. The company is hoping other key elements including connectivity, multicore CPUs, modem, graphics and video will also play a critical role in smart devices, including smart TVs, smartphones and tablets.
Marvell - RIM connection
The key issue for financial analysts is that Marvell seems unable to find the right customers.
Gary Mobley of Benchmark Co. called Marvell’s quarterly results and underlying guidance “less than inspiring.” “Some large diversified chip companies such as Broadcom seem to have an uncanny ability to find the right growth end markets (e.g. comm ICs) and the right customers (e.g. Apple)," he said in a research note. "Marvell, on the other hand, continues to struggle with too much exposure to no-growth markets (e.g. HDDs; 47 percent of revenue) and has suffered along with struggling customers (e.g. RIM). We reiterate our Hold rating.”
Indeed, Marvell owes its initial success in mobile phones to design wins in RIM’s Blackberry. As RIM tanked in the smartphone market, so have Marvell's fortunes. Asked about company plans to make up for losses associated with RIM in the global market, Dai stood by her customer, noting, “You should know that I go to the war for my customers. RIM is going through some tough times. Sure, as a part of the ecosystem, we are affected. But I am confident that RIM will be leading the pack with its enterprise software capability.”
Marvell is meanwhile betting big on its multimode, multifrequency band TD-LTE modem chip set for TD-SCDMA and LTE markets. The TD-LTE modem must operate on TD-SCDMA and GSM in the China Mobile network, while offering a roaming capability on 4G and FDD. Marvell’s PXA1802, announced last February is designed to meet those requirements. “This will become a foundation for our global leadership,” claimed Dai.
I think the analyst who suggested Marvell should drop out of the HDD market is a moron. The HDD market is a cash cow of significant profits for those involved and has a high technological barrier to entry. Marvell probably is able to use that cash as needed to move into other potential markets.
And the unnamed Chinese sources are questionable. Most people won't buy a smartphone if its battery life sucks. I feel Apple beat Nokia because Steve Jobs recognized this and focused on the end user experience. I personally don't see much advantage above dual core processors since most software is unable to take advantage of it.
I met a former Marvell board member earlier this year. He said its a real problem that nearly half of Marvell's revenues are tied up in HDDs.
Sure HDDs will be around forever but its a slow growth market. Flash is the big growth market.
Marvell is not nearly positioned as diversely or well as it needs to be, not nearly as well as Broadcom already is.
Marvell is practically controlled by a woman and her clones. This is not what a long-lasting public company should be run. Just this comment along should make any reasonably intelligent investor and analyst chilled: "I am confident that RIM will be leading the pack with its enterprise software capability"!
With all due respect, I actually liked what Weile said when I asked her about RIM.
If I were a system vendor, I wouldn't like my parts supplier publicly going against me.
I thought it was honorable for Weili to say, "You should know that I go to the war for my customer."
And if you're going to war, you really would want Weili on your side. That woman is a force to be reckoned with, and she doesn't give up.
To Weili and her husband, Marvell is more than a company, it's a family business, and like many family businesses in the US today, it faces some tough times, but because it's so close knit, I certainly wouldn't underestimate its potential to batten down the hatches and pull through.
Never kick an underdog... you might live to regret it.
When the CFOs keep running from the company, that means there is a problem... Marvell is not a public company, its a family owned business. Until, the family leaves, there is no hope for the company. I bought MRVL shares at $50 in 2006, its now $7 (after 2:1 split). I will definitely make a bet against them (short'em).
Dear Junko, thank you for another interesting article. And -- one certainly should wish Marvell and Weile to have a great success with their 3G/4G cell phone IC platform.
I do have a question for Bill Straus and his Forward Concepts since this is not the first time that EETimes uses his/their market share data.
By what accounting approach he arrived to his smartphone baseband market shares - whether they are in units or revenues?
Smartphones typically have either:
-- a standalone baseband (BB) - that goes together with a standalone application processor (AP)-- typically in high end smartphones a la Apple/ASIC or Samsung's Exynos processors
-- an integrated processor (BB+AP)- typically used in all low-end smartphones
According to Forward Concepts Marvell is about two times larger than either MediaTek or Broadcom in 1H12 smartphone baseband shipments...!? Could you, Junko, kindly ask Forward Concepts to explain - how was that arrived to - based on all known factual company data, including Broadcom success at Samsung and MediaTek's success in China's smartphones?
Of course, in feature phones there are only BBs -- just MediaTek sells there more than 0.5B BB units there but that was not the subject of the article and Forward Concepts graph.
Many thanks, once again and my regards
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.