No Lou Reed, no YouTube talk, no rockstar startups — oh right, I didn’t go to Web 2.0 yesterday, I spent the afternoon in a dark nook of the Santa Clara Convention center listening to engineers talk about silicon. Yep, it was Broadcom’s big analyst day, where the company’s executives show off demos of the latest chip technology and give presentations about how they are going to make investors a lot of money.
Actually Broadcom is one of the best positioned communication chip companies in the market (options scandal aside), leading in some categories like WiFi and bluetooth silicon, and increasingly concentrating on mobile handsets and consumer electronics chips. The company powers the Nintendo Wii’s bluetooth controller and wireless connection, and provides a multimedia chip for Apple’s video iPod. Analysts might whisper about the iPhone or a WiFi-enabled iPod, but if anyone knows the truth it’s this room full of Broadcom folks.
At the analyst day CEO Scott McGregor said the company is pushing even more into the cellular industry, where it has been trying to compete against the likes Qualcomm with only moderate success. Every company executive also said that Broadcom is also trying to win over more consumer electronics companies, like MP3 players and video players, though I didn’t see any sneak-peeks at future iPods or Zunes at the show. The company did announce its first chip solution for application processing, which runs multimedia in mobile phones and consumer electronics. It also announced a chip solution that combines both Blu-Ray and HD-DVD for media players, and said SanDisk is using Broadcom’s multimedia and power management chips for its V-Mate Video Memory Card Recorder.
On the demo floor the company showed off its mobile future, with a HSDPA chip solution (which isn’t on the market yet), as well as its mobile TV designs which will support all of the mobile TV standards (even MediaFLO.) At the show the company announced that its “M-Stream” mobile noise-canceling software will debut on the Treo 680 — improving the signals of existing cell phone calls is a hot area right now.
The wireless connectivity group is the fastest growing Broadcom business, and includes wireless technologies like bluetooth, WiFi and wireless VoIP. Mike Hurlston, Vice President for the Wi-Fi Group showed off the next-generation “draft-N” WiFi products and said the company recently added HP as its fourth laptop manufacturer partner, an agreement it will announce soon. He also demoed the latest Skype-phone made by Buffalo announced earlier this week. The company is working on other wireless technologies like Near Field Communication, GPS solutions, UWB and even made a mention of mobile WiMAX in power point materials.
It’s also true that the company has been dragged into the whole option accounting scandal. At the conference the acting CFO Bruce Kiddoo spent a good deal of time assuring attendees that the financial issues would be over soon. That plus depending on the sometimes cyclical semiconductor industry, means the stock can be pretty volatile.
Another Broadcom setback is its endless war with Qualcomm over who is infringing on what patents. While Broadcom recently won a small battle according to a judge with the International Trade Commission, I can’t help but think that the negotiations might be rather distracting. The CEO McGregor said that the fight is a long term investment for the company and its competitors, and Henry Samueli, the founder, CTO and Chairman of the Board, said the battles don’t affect day to day business. I asked Samueli if he was happy with the ITC judge’s latest decision that Qualcomm infringed on one patent but dismissed the other two claims. He said this is only the beginning.