Conexant spun off in 1999 from Rockwell, which at the time held a dominant
position in the voice and fax/modem chip market. Now Conexant looks as though it’s
going back to its voice heritage. The company is keen on
carving out a niche for its voice processing technology.
Consumer Electronics Show earlier this year, Conexant showed off its
proprietary far-field voice input processor SoC, which works on a voice
trigger, to turn a TV on or off even in a noisy room. The same voice
processing chip can be also used with VoIP applications such as Skype
TV, so that a user can talk to another person on Skype even while the TV
is blasting in high volume. Keys to such solutions are Conexant’s
far-field voice processing algorithms (acoustic echo cancellation, noise
reduction, beam forming as well as pre- and post-processing) and its
high performance 24-bit A-to-D converter.
Beyond voice processing, Conexant will focus on printer SoCs, headsets for gaming machines and video surveillance.
Chittipeddi noted that Conexant today has a solid customer base including Plantronics and Logitech.
also important to note that Conexant is avoiding the already crowded
market for consumer video products and set-tops, where competition is
intense and often dominated by Broadcom. The company’s new commitment is
to well-differentiated niche segments.
With its more focused
portfolio, Conexant is confident of recovery and managing its growth
more reasonably. Free of debt payments, “we can generate cash that we
can use for investing in our business, rather than for paying interest,”
What went wrong
There are a million reasons why and how things went wrong for Conexant. However, betting on the Internet boom and building its business on “networking” wasn’t one of them.
problem for Conexant in the late 1990’s was that the company’s modem
chips were built for the analog era. In order to compensate for this
weakness, the company went whole hog acquiring technologies that looked
useful for building the broadband future of the Internet. Of the nearly $2
billion Conexant spent during its shopping spree, the most
stunning was the acquisition of Maker Communications, a Massachusetts-based
software company whose chips worked with light-based technology. Maker
Communications had all of $13.6 million in annual sales at the time it
sold itself for nearly $1 billion in Conexant stock, according to
As all this happened, Conexant underestimated
the constant need for large capital that had to be fed to the companies
it had acquired. In 1999 and 2000, Conexant ended up issuing two
tranches of debt, totaling $1 billion.
As an ex-Conexant in the early 2000,I agree with most of the analysis. Broadcom and Conexant are neighbors in Newport and many Broadcom employees are from Conexant. The only major difference is the vision of the management team. As far as I can remember, Conexant's CEO Dwight Decker was a nice guy, and we didn't have a strong CTO (don't even remember the name, or did we have one?). I was told Broadcom's CTO Henry Samueli was a visionary, so that might be the difference (in addition to the M&A strategy).
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