Communications - Mobile Handheld Devices Application IC
Intel's Infineon Acquisition and Implications on Baseband Chipset Industry Development in 2011
November 30, 2010 / Edward Lin
12 Page, Radar
US$1,080 (Single User License)

Abstract

Intel announced on August 2010 that the company has acquired Infineon's WLS (Wireless Solutions Business) for US$1.4 billion, signifying Intel's return to the mobile communications sector. Whether Intel will be able to maintain Infineon's 11% market share, or whether other vendors will take this opportunity to gain bigger market share are among the influences of this deal closely watched by the market. This report offers insight into this acquisition deal, Intel's strategies, and the impact on Qualcomm, MediaTek, ST-Ericsson, and Marvell, as well as the future development of mobile communications baseband chipset industry in 2011.
  •  Table of Contents
  •  List of Topics
  •  List of Figures

Intel's Entry Poses No Significant Impact on Baseband Industry Competition

It is observed that Intel aims to break into the mobile communications industry supply chains through the purchase of Infineon's WLS. However, Intel's 3G baseband client Apple has transferred its orders to Qualcomm. Moreover, although Intel continues to cultivate the 2G baseband chipset market, revenues brought by the market are not significant in the short term. Generally speaking, the acquisition is considered to be part of Intel's plan for future 4G technology development, LTE in particular. Combining its capabilities in OFDMA technology with Infineon's experience in baseband chipset development, it is expected that in the coming years, Intel will be able to launch LTE-related solutions when LTE service market takes off. Since it is observed that ARM structure has lower power consumption than Intel's Atom platform, it is projected that Intel's LTE solutions will focus on mobile devices, such as notebook PCs and tablet PCs.

MediaTek and Qualcomm, the two leading vendors in the 2G and 3G baseband chipset market, are observed to benefit the most from Infineon's acquisition. MediaTek faced stiff price competition in 2010, but the company is projected to generate profits after the acquisition.. However, 2G baseband market development is expected to be limited in the future, and Infineon's retreat from the market is projected to ease market competition only temporarily.

Market Competition Expanded to 4G; LTE Chipset Mass Production Expected to Start in 2011

Except for the TD-SCDMA market, it is observed that Qualcomm has dominated most of the segments in the 2G and 3G baseband chipset markets. Therefore, the only way to change the current market structure is to create another market by introducing LTE technology R&D and chipset developments.

Qualcomm, Nokia, Motorola, and Ericsson own the majority of the 3G technology patents; nevertheless, not a single branded vendor can claim the majority of LTE technology patents. Although Qualcomm leads the 4G market, accounting for approximately 16% of overall 4G patents, other competitors in the mobile communications industry are also equipped with rich resources. For example, major vendors in mobile CPE and semiconductor markets Samsung and LG and fast growing vendor in equipment industry Huawei have launched LTE chipsets for applications in data cards, in combination with HSPA or EV-DO technology. In addition, with its long-term experience in mobile phone baseband chipset market and support from its parent company Ericsson, ST-Ericsson has already released the LTE -supportive M700 platform.

Looking ahead, competition in the LTE market among branded vendors is expected to be fierce. Branded vendors are projected to allocate significant resources in 4G developments, from baseband chipsets for use in data cards only to integrated solutions for mobile phones.

Taiwanese Vendors Expected to Acquire or Cooperate with Companies with LTE Capabilities

Due to the lack of 3G patents, Taiwanese vendors have to pay a considerable amount of license fees in the 3G market. Moreover, it is observed that the Taiwanese chipset vendors have failed to make early deployment in LTE technology patents. Since LTE chipset, CPE, and service development has just begun, and no vendor dominates the LTE market yet, it is projected that Taiwanese vendors will cooperate with companies which have begun LTE technology development. As per the current environment, it is projected that Taiwanese vendors will try to team up with other branded vendors; for example, MediaTek and NTT DoCoMo inked an LTE technology license agreement in July 2010. As per the agreement, MediaTek aims to share DoCoMo's LTE technology patents and minimize the influences posed by Qualcomm when developing LTE chipsets in the future.

In addition to cooperation, mergers and acquisitions are also a means of obtaining LTE capabilities. For example, Intel acquired Infineon's WLS with a view to developing baseband chipsets, and Broadcom acquired Beceem aiming to begin LTE chipset development. It is observed that with global baseband chipset vendors aggressively deploying LTE technology, the speed of mergers and acquisitions in the industry will accelerate. It remains to be seen whether more similar acquisitions will take place in the future.

Appendix

Glossary of Terms

AP

 

Application Processor

aQFN

 

Advanced Quad Flat No-lead

CDMA

 

Code Division Multiple Access

CPE

 

Customer Premises Equipment

CPU

 

Central Processing Unit

EDGE

 

Enhanced Data rates for Global Evolution

EV-DO

 

Evolution-Data only

GPRS

 

General Packet Radio Service

GPS

 

Global Positioning System

GSM

 

Global System for Mobile Communications

HSPA

 

High Speed Packet Access

LTE

 

Long Term Evolution

OFDMA

 

Orthogonal Frequency Division Multiple-Accesses

OMS

 

Open Mobile System

RF

 

Radio Frequency

TD-SCDMA

 

Time Division Synchronous Code Division Multiple Access

ULC

 

Ultra Low Cost

WCDMA

 

Wideband Code Division Multiple Access

WiMAX

 

Worldwide Interoperability for Microwave Access

WLAN

 

Wireless Local Area Network

WLS

 

Wireless Solutions Business

List of Companies

Apple
 
 
Beceem
 
 
Blue Wonder
 
 
Broadcom
 
 
China Mobile
 
中國移動
Ericsson
 
 
HiSilicon Technologies
 
海思半導體
HTC
 
 
Huawei
 
華為
Infineon
 
 
Intel
 
 
K-Touch
 
天宇朗通
Lenovo
 
聯想
LG
 
 
LGE
 
 
Marvell
 
 
MediaTek
 
聯發科
Morningstar
 
晨星
Motorola
 
 
Nokia
 
 
NTT DoCoMo
 
 
Qualcomm
 
 
Samsung
 
 
Sequans
 
 
Sony Ericsson
 
 
Spreadtrum
 
展訊
ST-Ericsson
 
 
T3G
 
天碁科技
TI
 
 

 

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