ST-NXP Wireless + Ericsson: Our Thoughts

By: Will Strauss, President & Principal Analyst, Forward Concepts
(Business News & Technology News, 5 Sep 2008)

On August 2, 2008, STMicroelectronics acquired 80 percent of NXP Semiconductor's wireless product line, resulting in a new organization named ST-NXP Wireless. On August 20th, the resulting company entered into another joint venture with L.M. Ericsson to merge Ericsson Mobile Platforms (EMP), the wireless chip arm of L.M. Ericsson, with ST-NXP Wireless. L.M. Ericsson and STMicroelectronics will be 50:50 partners in the final (?) entity. And STMicroelectronics will exercise its option to acquire NXP's 20 percent interest in ST-NXP Wireless before the transaction closes.

Are You Following So Far?
The CEO of NXP is quoted as saying, "The additional proceeds of the 20 percent stake will enable NXP to further build leadership positions through innovation and investment in NXP's core businesses." But, wireless was NXP's core business. Now, I'll have to re-learn who NXP is.

The yet-unnamed 50/50 joint venture is said to have "the industry's strongest product offering in semiconductors and platforms for mobile applications and will be an important supplier to Nokia, Samsung, Sony Ericsson, LG and Sharp." That's true, but it will not be the only supplier to those companies.

What's Synergistic; What's not?
The chief beneficiaries of the ST-NXP-EMP bonding will be the company executives, who's compensation will certainly scale up with the greater size of the resulting organization. But, there may (or may not) be synergism in this conglomeration. For example:

- 3G Software: From the UMTS/HSPA side, the resulting management team will have to decide to continue with three different software stacks (Comnion's from NXP, EMP's own and Nokia's). Likely, the Comnion stack will be eliminated in new designs, since that is licensed from Infineon. Nokia will probably not allow the new company to sell chips to others based on Nokia's stack, so that leaves EMP's stack as the selection (and probably the brains behind future EMP stack development).

- 3G Baseband Chips: EMP is currently employing licensed CEVA-X DSP cores in their UMTS/HSPA baseband. STMicroelectronics doesn't have a 3G baseband, yet. The 400 ASIC designers that ST acquired from Nokia last year are likely working on that now. To the new company, NXP has contributed its Embedded Vector Processor (EVP) DSP chip, currently shipping in TD-SCDMA cellphones for China, and slated for HSPA basebands, soon. We've been briefed on the EVP architecture and it appears to be powerful enough for LTE, so we'll bet on it as the "one to ride."

- 3G RF Transceiver Chips: STMicroelectronics has long been Nokia's principal analog chip supplier, including RF transceivers. However, it's unclear whether ST's 3G RF transceivers are based on Nokia designs or its own. If based on Nokia design, it's unlikely that Nokia would allow sales to others. Both NXP and EMP contribute their own quad-band 3G RF transceivers, so it will be a toss-up as to which one to employ for future designs.

- Application Processor Chips: STMicroelectronics' Nomadik application processor family is well developed, as is NXP's Nexperia product line. EMP has been using TI's OMAP application processors, and was slated to use advance OMAP3 devices in the future. It's likely that the new company will opt for one of its own solutions for future designs. All three families are based on ARM processor cores, so ARM wins, anyway.

What About a Name?
Since "ST-NXP-EMP" doesn't come trippingly off the tongue, I trust that a new company name will be forthcoming... hopefully, one that speaks to its wireless underpinnings and is easy to pronounce.

Who's Left to Acquire or Merge With?
Infineon Technologies (Munich) and Icera Semiconductor (Bristol, U.K.) appear to be the only Independent sources of UMTS/HSPA basebands now (other than Qualcomm), but Freescale Semiconductor may soon have a complete UMTS/HSPA solution (un-bound from Motorola).

I believe that Icera would be a good acquisition target for Texas Instruments (if it wants its own non-Nokia UMTS/HSPA baseband and RF immediately) or even Intel (if it wants to get back into cellular with its Atom-based Mobile Internet Devices). Apple employs Infineon's UMTS/HSPA baseband and RF transceiver chips in the 3G iPhone (and Infineon's EDGE baseband and RF chips are in the original iPhone). If Steve Jobs is happy with the arrangement, Apple is probably not interested in Icera. But, Icera and its VC backers would rather float an IPO, anyway.

Click here for more information on Forward Concepts


RELATED ARTICLES

STMicroelectronics, Ericsson to Form Wireless Chip Company

ST-NXP Wireless Appoints Corporate VP Sales and Marketing

STMicroelectronics and NXP Complete Deal to Create New Wireless Semiconductor Company

STMicroelectronics-NXP Semiconductor Wireless Business JV to be Named ST-NXP Wireless

STMicroelectronics, EMP to Develop Analog Baseband Processors