SHANGHAI–Persistent speculation about a pending merger between Chinese fabless chip vendors RDA Microelectroics and Spreadtrum Communications may have some basis in reality, but word is that RDA has its sights set on a higher bidder.
For months, rumor has had it that Spreadtrum is poised to buy RDA, which specializes in radio-frequency and mixed-signal wireless SoCs for cellular and connectivity. Industry
observers pegged the potential deal between the two leading
Shanghai-based fablesses as ideal, since RDA can provide genuinely
low-cost RF solutions to Spreadtrum’s leading baseband chips.
Spreadtrum—armed with its TD-SCDMA baseband chips—has dominated the handset market for China Mobile, the world’s largest mobile operator by subscriber count (700 million). Meanwhile, RDA has been China’s leading provider of power amplifiers, Bluetooth and FM tuners.
Asked about the speculation during a recent interview, Vincent Tai (below), CEO of RDA , flatly denied any imminent deal with Spreadtrum.
“We’ve never talked,” claimed Tai. “OK, we may have said to each other, at one point, we should look into the future,” he added, but that never led to any serious discussion.
Leo Li, Spreadtrum’s CEO, paints a different picture.
“We considered it [the acquisition of RDA],” Li acknowledged. However, after having looked into it, Li now sees RDA as “a component company,” which can add little value to Spreadtrum. “If we spend any money, we want a company with a lot more software engineers,” said Li. He continued to downplay a Spreadtrum-RDA deal that never took place as “last year’s story.”
For sale at what price?
Last year’s story or not, RDA’s Tai acknowledged in a recent interview here that the “time is coming soon” for Warburg Pincus, who provided $20 million in seed money for RDA, to start looking for return on his investment. Pincus co-founded RDA in 2004. RDA completed an IPO on the NASDAQ stock exchange in November 2010.
Tai, however, sees little reason for RDA’s acquisition by either Spreadtrum, or even Qualcomm (another company rumored as a potential buyer).
According to Tai, company acquisitions tend to be driven by three factors: killing the competition, acquiring IP the idea that the merger will result in a strong company.
To Tai, none of the scenarios is applicable to RDA today.
It’s because RDA is “already the number one provider of power amplifiers, Bluetooth, FM tuners, DVB-S tuners in China,” claimed Tai. To those who criticized RDA for its lack of baseband offerings, RDA has already proven them wrong. RDA last year rolled out RDA8851, a high-performance, low-cost SoC that integrates the GSM baseband, quad-band RF transceiver, power management unit, Bluetooth and FM receiver in a single-chip 55-nanometer design. Since then, “we’ve already become the number two supplier in GSM baseband,” noted Tai.
RDA is one of few chip vendors capable of integrating an RF transceiver and baseband on a single CMOS die. Compared to competitors’ system-in-package solutions, RDA8851 eliminates the need for the 32k crystal and SAW filter, thus significantly reducing cost, power consumption and board space, according to RDA.
RDA will start sampling “within the next couple of weeks” a single-die, integrated baseband/RF transceiver solution -- using 40-nm process -- for EDGE smartphones, Tai said. WCDMA version will follow in the fourth quarter this year.