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Steve_B
After the leading edge of a technology (e.g., smart phones) passes, volume and ...
sranje
Yoshida in China: How ST and Renesas blew it on mobile
Junko Yoshida
3/20/2013 1:01 PM EDT
Global market beyond China
Another reason for paying attention to China’s handset vendors--including the many local design houses--is that they hold the key to the global market beyond China, in such countries like India, Africa and South East Asia.
Spreadtrum’s plan to sell into such markets outside China is comprehensive and elaborate. The company follows a few different routes. First, Spreadtrum directly works with design companies in Shanghai and Shenzhen, who will sell their handsets to branded handset vendors like India’s leader, Micromax. (It’s important to note that Spreadtrum also invested in this popular Indian handset vendor.)
Second, Spreadtrum plays an active role in “match-making,” said Li, between local branded handset vendors and local design houses.
Third, getting design wins in global handsets such as those by Samsung also helps get Spreadtrum’s chips into handsets sold in developing countries outside China, he added. Spreadtrum’s baseband chip last fall got a design win from Samsung Electronics. Spreadtrum is supplying a 40nm 2.5G baseband, the SC6530, to power Samsung E1282 and E1263 Trios mobile phones.
In Africa, Li noted, “We also work very closely with Orange, the French operator,” who has a big presence there. Noting Spreadtrum’s close relationship with Orange, Li said, “They understand the needs of the African market, and we offer chipsets that pass their certification.”
Level-playing field
As EE Times previously reported, the availability of popular IP cores including ARM, Imagination and CEVA, foundry services based on cutting-edge process nodes at Taiwan Semiconductor Manufacturing Co. or others, and various design tools and design services, have created an unprecedented level playing field, contributing to the emergence of countless fabless companies in China over the past several years.
Of course, that doesn’t mean that every Chinese fabless has been winning this war.
The reality is that many fabless companies, especially apps processors in China, plagued with me-too products, are struggling to find differentiations.
Among them, Spreadtrum in China is deemed an exception to the rule. Spreadtrum differs, because “we pay a lot of attention to R&D, technology and quality,” said Li.
The company has also steadily built its baseband portfolio, first by developing its own TD-SCDMA baseband technology for China, then adding WCDMA solutions through MobilePeak acquisition. Later on, Spreadtrum licensed LTE baseband technology (CAT 4) from a company based in Egypt. While Li declined to name the Egyptian company, he said that it is the same company from which Beceem--now owned by Broadcom--also licensed LTE technology.
“By the end of this year, I will have in my portfolio every technology handset vendors need and what Qualcomm and MediaTek already have. I will be there,” said Li.
More significantly, “I can drop the price by half,” compared to those developed by the Western chip companies, he claimed. “We do so by offering not inferior products, but that are as good as those of my competitors, in terms of quality and performance.”
Why could he say that? “Because my cost structure is low,” Li smiled.
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Another reason for paying attention to China’s handset vendors--including the many local design houses--is that they hold the key to the global market beyond China, in such countries like India, Africa and South East Asia.
Spreadtrum’s plan to sell into such markets outside China is comprehensive and elaborate. The company follows a few different routes. First, Spreadtrum directly works with design companies in Shanghai and Shenzhen, who will sell their handsets to branded handset vendors like India’s leader, Micromax. (It’s important to note that Spreadtrum also invested in this popular Indian handset vendor.)
Second, Spreadtrum plays an active role in “match-making,” said Li, between local branded handset vendors and local design houses.
Third, getting design wins in global handsets such as those by Samsung also helps get Spreadtrum’s chips into handsets sold in developing countries outside China, he added. Spreadtrum’s baseband chip last fall got a design win from Samsung Electronics. Spreadtrum is supplying a 40nm 2.5G baseband, the SC6530, to power Samsung E1282 and E1263 Trios mobile phones.
In Africa, Li noted, “We also work very closely with Orange, the French operator,” who has a big presence there. Noting Spreadtrum’s close relationship with Orange, Li said, “They understand the needs of the African market, and we offer chipsets that pass their certification.”
Level-playing field
As EE Times previously reported, the availability of popular IP cores including ARM, Imagination and CEVA, foundry services based on cutting-edge process nodes at Taiwan Semiconductor Manufacturing Co. or others, and various design tools and design services, have created an unprecedented level playing field, contributing to the emergence of countless fabless companies in China over the past several years.
Of course, that doesn’t mean that every Chinese fabless has been winning this war.
The reality is that many fabless companies, especially apps processors in China, plagued with me-too products, are struggling to find differentiations.
Among them, Spreadtrum in China is deemed an exception to the rule. Spreadtrum differs, because “we pay a lot of attention to R&D, technology and quality,” said Li.
The company has also steadily built its baseband portfolio, first by developing its own TD-SCDMA baseband technology for China, then adding WCDMA solutions through MobilePeak acquisition. Later on, Spreadtrum licensed LTE baseband technology (CAT 4) from a company based in Egypt. While Li declined to name the Egyptian company, he said that it is the same company from which Beceem--now owned by Broadcom--also licensed LTE technology.
“By the end of this year, I will have in my portfolio every technology handset vendors need and what Qualcomm and MediaTek already have. I will be there,” said Li.
More significantly, “I can drop the price by half,” compared to those developed by the Western chip companies, he claimed. “We do so by offering not inferior products, but that are as good as those of my competitors, in terms of quality and performance.”
Why could he say that? “Because my cost structure is low,” Li smiled.
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eewiz
3/20/2013 2:10 PM EDT
"The game is over for Western chip companies--except for a sole survivor and the mobile chip industry leader, Qualcomm."
Well Nvidia is still hanging in there. Rumours are they lost the socket in upcoming Nexus7.7 tablet to Qualcomm though.
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sranje
3/20/2013 7:28 PM EDT
hmm - did you perhaps forgot Broadcom? The king in wireless connectivity and a tryly astronomic growth growth in application processors last year
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sranje
3/20/2013 10:32 PM EDT
Dear Junko,
It is difficult not to like Spreadtrum -- a fast acting, highly enterprenerial, fast growing and successful China's Mobile IC vendor. However, as much as I like your articles, I don't think that you know yet how "this movie will end" -- for at least two reasons:
1. Qualcomm has been hugely successful and is becoming more and more so. But there are also Broadcom - in 2012 probably the fastest mobile processor company on Earth (even if you include China's whitebox tablet processor vendor - Allwinner). And there in nVidia - a company that has proven delivering a stream of very advanced processors in a record time -- unfortunately to date in a limited portion of tablets - squezzed between huge market shares of Apple and Amazon. And there is the Intel - vendor of advanced baseband processors and transceivers. Both Intel and Broadcom are leading suppliers to Samsung (60M smartphones in 4Q12). And then - the Samsung itself - a unique giant who might be on threshold of achieving its decades-old objective to become larger than Intel. Your dirges about Western mobile processor vendors are way premature.
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sranje
3/20/2013 10:33 PM EDT
2. But there is another, perhaps even more important reason. The evolution of smartphones and tablets has not ended -- it has ONLY started. We are just entering an era of accelerating changes, of wireless communication having speed and bandwidth of wired Ethernet and broadband connections. LTE, then LTE-A, and on and on will completely transphorm today's smartphones, tablets, etc. into new devices with nearly unimaginable processing capabilities - 20+ computing cores, new generations of OSs and application SWs that will manage and utilize them, etc., etc. Think voice generation / recognition and processing power required, think of possibilities of new sensors, new non-volatile memories, GaN-on-Silicon power conversion, energy harvesting, new battery technologies, data transparency and data use. Where do you think the future will be forged? Who will be the winners?
In summary - there will be plenty of space for winners in this accelerating transformation of mobile devices for current and future winners - in China and in Western wordls.
The "movie you are writing about" has just started
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junko.yoshida
3/21/2013 3:46 AM EDT
Well put, and well debated, sranje. No doubt, you could say "the movie we want to see" has just begun.
But the point that I was trying to make in this piece was following.
If a Western chip company doesn't have a "strategy" to serve a growing number of Chinese design houses/OEMs/ODMs,they will see a shrining market. Sure, a growing number of new features and technology advances are to be expected in the next-generation smartphones. But again, what's your strategy to serve "non-tier one" companies?
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sranje
3/21/2013 11:24 AM EDT
Thank you Junko -- you can bet that each of them thinks hourly about that same subject.
Plus Huawei, Lenovo, ZTE and several other already are or soon will become "Tier-One" mobile device vendors
Please keep a stream of your wonderful articles coming.....
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GeeKv2
3/21/2013 11:36 AM EDT
What would be interesting to know is how many of non TD-SCDMA chipsets Spreadtrum actually sells. Its success is largely based on that technology which is used by just one operator in one country and it got lucky.
Agreed that the volumes are huge but why would anyone put all their eggs in one basket? R&D budgets are always tight. STE and Renesas tried and failed to serve tier-one handset makers but where would you rather invest resources in? Low cost, high volume single market or rest of the world? TDSCDMA is not a very attractive proposition for R&D when WCDMA is used by the rest of the world. In any case, western chip companies will not be able to sell at the price Chinese companies can.
Moreover, if you had to choose, who would you rather compete with? Qualcomm or Mediatek? I think Intel has been attacking both and benefits from low cost high volume sales as well as high-end phones.
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fordownloads1
3/21/2013 12:16 PM EDT
I don't think we are doing apples-to-apples comparison here. Comparing Qualcomm and Spreadtrum is like comparing an high speed jet with a passenger bus. Who is driving the technology hard? Qualcomm or Spreadtrum? Just saying.
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chipmonk
3/21/2013 1:13 PM EDT
Due to outsourcing and financial "engr." the buying power of the US and W. European customer is going down. For the very same reasons the buying power and technical capability of the Chinese is going up. For cheaper high volume items like Smart Phones the cross-over point is in sight. Soon there will be a mass selling off of related technology from second tier W. corp.s to China. Perhaps ST and Renesas will be the next to cash out.
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sranje
3/21/2013 1:27 PM EDT
And then -- there is an apple.....
The Apple among all the oranges.
And there are national strategic and economic interests of various countries - supporting native sons - among OEMs, IC vendors and foundries
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Steve_B
3/22/2013 6:01 PM EDT
After the leading edge of a technology (e.g., smart phones) passes, volume and revenues favor companies good at manufacturing or who have a few very-high-volume products. But a new wave of technology will favor companies that are good at engineering the new products -- at least for a while, until that edge passes. Companies good at both, like Intel and Samsung, are more likely to do well in both parts of the cycle than companies that are not as deep technically. So what's after smart phones? Wish I knew, but I would look at companies with deep technical benches to do better then, if they survive that long!
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