Early signs of a mobile chip consolidation


We guess Monday morning is as good a time as any to announce massive chip deals. Not one, not two, but three of them.

Qualcomm says it is buying two chip companies, Airgo and the majority of RF Micro Devices, and meanwhile LSI Logic says it is buying Agere Systems. These purchases, along with the ongoing patent fights within the wireless chip industry, highlight how big the stakes are in the battle over the silicon in connected mobile devices.

Qualcomm is able to lead the market for 3G cell phone chips, but has been trying to build up its portfolio with other wireless networking technologies. Qualcomm has been particularly interested in companies with a lot of patents in this area, and Palo Alto-based Airgo holds numerous valuable intellectual property for MIMO (multiple-in, multiple-out) — a technology that enables frequency to carry more data and boosts the transmission speed.

Airgo maintains that it is the first to market WiFi plus MIMO technology, and combined with Qualcomm, the technology can be more easily integrated into the mobile market.

“With the increasing importance of mobile broadband solutions for the laptop, Qualcomm may be able to gain Wi-Fi market share as cellular modem vendors purchase 3G/802.11n chipsets,” said ABI Research senior analyst Philip Solis. “However the powerful Intel “Centrino” brand will be a significant obstacle to Qualcomm’s success in that sector.”

ABI Research principal analyst Stuart Carlaw notes that “With Qualcomm’s history of integration, these acquisitions provide a very logical precursor to a highly integrated series of cellular chipsets that incorporate both 802.11n and Bluetooth. Outside the cell phone, Qualcomm now effectively owns a stake in the Bluetooth market that will enable it to expand into the CE environment with greater ease, due to the growing profile of Bluetooth in the gaming, PMP and music player markets.”

Qualcomm also said today that it has purchased the majority of North Carolina-based RF Micro Devices’s Bluetooth technology, which makes an enhanced Bluetooth technology for mobile devices and headsets.

Then there is the news that LSI Logic is buying Agere Systems for $4 billion in stock which will boost its move into chips for wireless and fixed networking and storage.

As mobile devices and networks become more advanced, Qualcomm and the other wireless chip companies are packing devices with all sorts of silicon to create the connections — Bluetooth, WiFi, cellular, etc. Broadcom has been emphasizing its push into mobile phones recently, and Motorola bought 3G software and chip company TTP this summer.

Whatever company can develop the best ways to wirelessly connect devices and defend those patents in courts, will dominate the future wireless market. Last week a Nokia executive said that the ongoing patent fights between Qualcomm, Nokia, Broadcom, and others will determine the industry’s future.

Qualcomm will now have its newly acquired Airgo IP to continue to battle its competitors in courts. For companies that have been battling and complaining about Qualcomm’s chip royalties, the news isn’t necessarily good. Look forward to more wireless-inspired patent fights.


Jesse Kopelman

Not to discount Airgo as a entre into WiFi and what not, but MIMO is quite relevant to the core 3G business. You need to MIMO to get to LTE and the like.

Klaus Kohlert

Qualcomm says it is buying two chip companies1, Airgo and the majority of RF Micro Devices,

“majority of RF Micro Devices” ?

This is a move clearly directed against Broadcom. Broadcom is one of only a few companies that make real money on bluetooth chips because of the volume they sell.

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