Broadcom's NFC play: Because time is right

LONDON – In June 2010 fabless communications chip company Broadcom Corp. announced that it had agreed to buy Innovision Research & Technology plc (Cirencester, England), a pioneer of RFID and NFC circuits and intellectual property, for $47.5 million in cash.

NFC (near field communications) is based on the RF-energized tag technology known as RFID operating at 13.56-MHz, but it has for some time been touted as a means of making electronic micro-payments. It is already used for some ticketing and public transport ticketing but deployment within mobile phones has long promised to turn them into electronic wallets.

With the Innovision deal now complete Craig Ochikubo, vice president and general manager of wireless personal area networks business unit for Broadcom (Irvine, Calif.), explained why the company had moved on Innovision at this time. "We looked at all the NFC players. We have talked to Innovision for a number of years," he said. "We wanted to take the technology and accelerate the time to market.

Ochikubo said it is a combination of timing and business models for the best route to market for the technology. Whereas NFC has made slow progress towards deployment in previous years as a means of contactless payments, the network operators are now starting to insist on the inclusion of the technology in mobile phones so that they can be ready for infrastructure roll outs. They command the handset makers who in turn provide the requirements to chipset makers such as Broadcom.

It should be noted that shortly before the Broadcom takeover was announced Innovision said it had signed a contract with a unnamed semiconductor company for the use of its NFC IP in their range of chips targeted at mobile handsets and other consumer electronic products. The deal was estimated to be worth $2 million in this financial year and that it could bring in $10 million over several years.

With rumors that Apple is set include contactless payment via NFC in its next iteration of the iPhone – the iPhone 5 – and Broadcom as a long-standing supplier to Apple, is there a pattern here? Did Apple tell Broadcom that the technology was required and that the long-term supply of the technology should be secured?

"I can't comment on customers' products. Apple is an enigma to us just as it is to everyone else," said Ochikubo. But speaking of the market more generally he said: "Deployment is bound to happen." That is for contactless payment in handsets but also for other applications and other platforms, said Ochikubo.

But whereas Innovision had an intellectual property business model, licensing NFC circuits out broadly, Broadcom's business model is essentially a product based one. "We will continue to develop NFC and the position Innovision had in standards setting," said Ochikubo. Broadcom will, of course, honor licensing commitments made by Innovision prior to the acquisition and will license out technology where it holds essential patents to standards, he said.

"There were field trials in the past. Now we are seeing broader roll out of terminals for contactless payment. There's a lot of momentum building." It's not just contactless payment in handsets. There is also the use of NFC for pairing pieces of equipment that then communicate over another RF channel, Ochikubo said.

NFC is also transitioning from being a stand-alone piece of silicon to being integrated within a system-chip, or in the handset case a combination connectivity chip, said the Broadcom executive. "NFC sits very well with combination devices." There are compromises that must be made to combine different radio frequencies and modulation schemes to minimize interference. "Integrating technology into one chip, into a smaller area and reducing the bill of materials, that's what we do," said Ochikubo.

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