Forward Concepts Wireless/DSP Newsletter 11-12-2012

Qualcomm Leads in Global DSP Silicon Shipments

When people speak of "DSP chips", they are usually referring to discrete devices that are catalog or "off-the-shelf" units; although at the high end they tend to be customized for high-volume customers. And, they correctly associate Texas Instruments as the DSP chip market leader.  However, those DSP chips from TI, Freescale, ADI, NEC and others constitute only about 10% of the "DSP silicon" market in revenue terms, as I have detailed in a much earlier newsletter.

The largest market for "DSP silicon" is as embedded solutions, generally thought of as System on Chip (SoC) products.  Of that SoC DSP market, cellphones constitute the largest segment, with baseband modem chips being the most significant.  All baseband chips consist of one or more DSP cores. Qualcomm, the clear baseband market leader, has long employed two DSP cores in each of its MSM modem chips, and of late is shipping three or more of its latest Hexagon DSP cores in its Snapdragon S4 chips.  In calendar year 2011, Qualcomm shipped a reported 521 million MSM chip shipments and we estimate that an average of 2.3 of its DSP cores in each unit resulted in 1.2 billion DSPs shipped in silicon.  This (calendar) year, we estimate that the company will ship an average of 2.4 DSP cores with each (more complex) MSM chip.  We estimate that Qualcomm will ship about 610 million MSM chips in 2012, for a total of 1.5 billion DSPs shipped in silicon for the full year.  Clearly, Qualcomm leads the global unit market for DSP silicon shipments.

Intel's LTE Plans

Intel has indicated that its Medfield Atom-based processor with integrated LTE will appear late this year to be ready for 2013 products. Rumor has it that for its LTE modem market entry Intel will employ the Tensilica-based LTE modem design that Infineon acquired from Blue Wonder Communications in Dresden…to be mated with its current Infineon 3G/2G technology.  This move by Intel could be responsible for some of the recently higher DSP licensing revenue by Tensilica (see below).

Tensilica Claims Highest DSP Licensing Revenue

Tensilica, Inc. has announced that its DSP IP licensing revenue over the four quarters ending June 30, 2012 surpassed that of any other DSP licensing company (read: CEVA) by an average of 25%.  Since CEVA is a public company and Tensilica is not, we'll have to take their word on the disparity.  Licensing revenue is the initial income stream for any IP vendor, while royalty revenue tends to follow at least a year or two in the future. However, licensing revenue is a strong indicator of future royalties.  Multiple Tensilica DSP cores in each unit constitute the heart of cellphones for NTT DoCoMo's LTE network in Japan, with chip fabrication by Fujitsu.

Although dominant in Japan, Fujitsu doesn't have the entire LTE market there; Kyocera has been shipping a dual-mode LTE smartphone based on Renesas Mobile's modem since January.

Imagination Technologies Acquires MIPS Technologies: Now What?

Imagination Technologies is the clear market leader in graphics cores for cellphone application processor chips and with few exceptions those application processors are based on ARM CPU cores. Lately, ARM Inc. has been encroaching on Imagination's market position with its own Mali graphics cores.  Many believe that the CPU world is coalescing around ARM and x86 architectures, causing PowerPC and MIPS to see diminishing markets; hence, the motivation for MIPS Technologies to sell much of its patent portfolio (to Allied Security Trust, a consortium that includes 26 companies, including ARM, Intel, HP, IBM, etc.) and to sell the company itself to Imagination.  Imagination Technologies' well-known CEO, Hossein Yassaie, stated that, "The MIPS architecture is widely respected, and is complementary to Imagination's existing CPU capabilities." He went on to say, "Imagination will continue to support and expand the MIPS architecture and ecosystem, with the combined effort aiming to create a new industry-leading force in CPU development and licensing."

MIPS CPUs are generally considered the most popular ones for devices that are powered from the wall while ARM CPUs are the most popular for portable devices, especially cellphones and tablets. MIPS claims that its architecture powered over 700 million units in its most recent fiscal year, so it has a sizeable market.  Although there are low-power members of the MIPS family, Imagination's challenge will be to ensure that they get into Imagination's own products and into more portable devices, expanding the MIPS market footprint.

Barcelona Update

In my last newsletter, I mentioned that the next Mobile World Congress in Barcelona that the venue has moved to a new location that is 3.3 km from the closest Metro station (Plaza Espanya).  Actually, the Europa subway station on lesser-used line 8 is only a three-block walk to the new venue. Hopefully, line 8 schedules will be adjusted to carry the bigger load.  But walking shoes would still be good to bring.
As always, I encourage your feedback.

Will Strauss
President & Principal Analyst
Forward Concepts