SAN JOSE -- In a setback for its fledging cellular-phone semiconductor business, Intel Corp. is quietly backing away from the CDMA chip set market as part of a plan to focus on new and more promising wireless-IC segments, SBN has learned.
The Santa Clara, Calif.-based company entered the IS-95-compliant chip-set market for code-division multiple access handsets only eight months ago after agreeing to acquire cell-phone IC specialist DSP Communications Inc. for $1.6 billion (see Oct. 14, 1999, story). But Intel had little luck in garnering design wins in CDMA, due in part to stiff competition from the leading supplier of chip sets in this booming business-Qualcomm Inc. of San Diego, analysts said.
Instead of CDMA, Intel will focus more on developing and selling cell-phone chip sets for other digital-cellular standards, such as TDMA (time-division multiple access), PDC (Personal Digital Communications), and third-generation (3G) wireless, according to Ronald Smith, vice president and general manager of Intel's Wireless Communications and Computing Group.
"We are not focusing on the CDMA market," Smith said in an interview the Intel Developer Forum in San Jose this week. "We're still selling the PDC chip set. We announced a TDMA chip set. We are also interested in wideband-CDMA W-CDMA, but IS-95-compatible CDMA is more of a proprietary market."
Smith's comments were made in reference to Qualcomm.'s dominant position in the CDMA chip set market. Though Qualcomm has licensed its CDMA chip technology to several IC vendors--including Intel, LSI Logic, Philips, and PrairieComm--the San Diego company had a 89% share in the worldwide IS-95-compliant, CDMA-based chip set market in 1999, according to Hambrecht & Quist LLC of San Francisco.
When Intel acquired DSPC last October, however, the Santa Clara-based company hoped to give Qualcomm a run for its money in CDMA. At that time, Intel was expected to leverage its vast resources and fab capacity to grab significant market share away from a much smaller entity in Qualcomm.
Competitors believed that Intel was never a factor. "Intel had a few design wins, but I never saw them in the market," said Johan Lodenius, senior vice president of marketing and product management for Qualcomm's CDMA Technologies Division, the chip and software arm of the company.
Now, Intel is looking for new and better opportunities in the cell-phone IC market, such as non-CDMA chip set lines, RISC-based controllers, flash memories, and other devices, according to Smith. "The cell-phone market is very robust," Smith said. "The demand for our flash memories and other products is also very robust."
Smith added that Intel is more bullish on a next-generation CDMA standard called W-CDMA, which is being endorsed by Motorola, Nokia, NTT, and other large OEMs and carriers. In theory, 3G enables cell-phone products to obtain wireless data at speeds up to 2-Mbits.
3G is expected to be deployed in Japan in 2001, followed by Europe and the United States. With Japan looking to take the lead in 3G, Intel wasted no time in finding a partner in that nation. Last May, in fact, Intel and Mitsubishi Electric Corp. announced a deal to co-develop a chip set for 3G-enabled cell phones.
The company also has high hopes for a new line of chips for cellular-phones, PDAs, and other products. Introduced this week at the Intel Developer Forum in San Jose, the company's new XScale product is a new architecture designed for low-power, handheld equipment (see Aug. 23 story).
Intel is also co-developing a promising line of digital signal processors (DSPs) with Analog Devices Inc., which will be a key part of the company's cell-phone chip strategy, Smith said. "(The DSP) is on schedule," Smith said. "We expect to disclose the details later this year."
Analysts believe the DSP from the Intel/ADI duo will be not be shipped until the end of this year. "My guess is that Intel won't disclose anything about the DSP until November," said analyst Will Strauss of Forward Concepts Co., based in Tempe, Ariz.