Nalini Muppala

Analysis, observations, perspectives on mobile space

Texas Instruments – Recent Wireless Moves

[Originally for Sramana Mitra on Strategy. Please comment here]

In light of Vijay Nagarajan’s TI series from last summer, we will look at some recent developments at TI.

If wireless and mobile semiconductor suppliers’ play in convergence device movement can be broadly classified into four categories — baseband modem, application processor, connectivity solutions, analog and power management — TI seems to be playing its cards right in three of those and completely dropped the ball on baseband modem. TI announced its intention to sell its merchant base band business late last year. Earlier this year, TI said this business would be run as end-of-life case after failing to find a buyer at a reasonable price.

Wireless Financials

The wireless division at TI took a huge hit in 2008 — revenue was down 19% to $3.38 billion, and profit dropped 55% to $347 million. Operating margin was down to 19.5% from 25.3% in 2007 and 23.6% in 2006. The suffering has continued into this year so far. Compared to the year-ago quarters, revenue fell by 42.48% in 4Q08; 40.17% in 1Q09; and 33.37% in 2Q09 respectively.

Baseband revenue in particular dropped 31% in 4Q08. TI’s share of baseband revenue fell to 19.7% from 22.1% in the previous quarter. The Nokia move seems to have hit the order books late last year. Incidentally, TI announced that it was exiting the merchant baseband business in 4Q08.

Nokia, a major customer for TI, used to source most of its baseband needs from TI. Nokia accounted a multi-sourcing strategy in late 2007. Suppliers are not switched on a whim, and design cycles span across phone models. Nokia accounted for an increased share of revenue in 2008. Nokia will likely continue to be a major source of revenue at least for the next few years. TI expects revenue from baseband to come to zero by the end of 2012.

Discrete Baseband

Following the trend of several DSP silicon firms, TI announced that it was leaving the 2G/2.5G cellphone baseband business earlier this year. After losing the position as top cellular baseband provider to Qualcomm in 2007, TI risks losing the second position to ST-Ericsson this year.

TI’s mobile development platform does not provide a complete solution for a handset design. The designer needs to make another stop at a baseband provider. This might turn out to be a big disadvantage for TI if the trend to consolidate to save continues.

As Vijay Nagarajan predicted in his TI series last year, TI announced a partnership with Interdigital. TI provides Interdigital’s 3G modem as one of the options alongside its OMAP application processor. Interdigital was more excited about this relationship, especially as it had abandoned its SlimChip line of modem products.

This could be an advantage in some cases. TI’s design platform offers flexibility to support any third party modem. This approach allows a handset vendor to choose the best baseband solution to fit design needs. An example of this design approach is the Palm Pre, which houses a top-of-the-line application processor from TI and a top-quality baseband solution from Qualcomm.

Application Processor

There are two approaches to providing application processor and baseband in smart phones. The integrated model provides an application processor alongside the baseband modem in a single physical part. In the discrete model, the baseband chip and the application processor are two separate parts. For lack of baseband IP and with a strong belief in the need for a powerful application processor, TI has taken the discrete approach.

The discrete baseband application processor approach got a big boost with the success of Apple’s iPhone and Palm’s Pre. If other leading phone manufacturers struggling to get a hold in the smartphone business take notice, TI, with a powerful application processor lineup, will see improved demand for its solutions. TI is betting on smartphones to be differentiated on the basis of user experience. It is also betting that a powerful application processor forms the basis of such innovative and powerful software.

TI maintains its lead in this lucrative segment. According to Forward Concepts, the stand-alone application processor market totaled $1.3 billion in 2008. TI dominated with 43% of revenue, followed by Samsung with 17.4%, and Marvell with 17.1%. ST-Ericsson took 9.4%. Samsung parts are used in the Apple iPhone and some of its Samsung’s own offerings. Marvell parts are used in BlackBerry phones.

Application processors from most vendors are built around the same RISC cores licensed from ARM. Some even share the same graphics engines licensed from Imagination technologies. The various peripherals for connectivity with outside world and to the rest of the system are essential and won’t likely tip the scales when weighing sourcing options. So what differentiates these products? Multi-media accelerator cores that help improve video, image, audio experience. Better equipped — and costlier — OMAP parts incorporate a highly regarded davinci 64x+ dsp to aid in video processing. This gives TI a slight edge in performance. TI also has an advantage in the breadth of application software readily available from its network of third-party developers.

Competition is fierce. TI has to contend with competitors moving at an equal or faster pace to migrate to newer manufacturing processes in order to gain power savings and speed improvements. For example, Samsung recently demonstrated ARM cortex-A8 at 1GHz, a speed at which TI plans to sample in 2H 2009.

Connectivity Solutions

TI has a complete suite of connectivity solutions such as Bluetooth (BT), WLAN, and FM. It offers GPS solutions as well. TI does not have the best solution nor is it the market leader in any of these radios taken individually. But it does offer a combination of several radios to suit various design needs. Other vendors like Broadcom and CSR offer similar combo modules. Before the advent of combo chips, designers cherry-picked the best solution for each radio, making CSR, Broadcom, and Marvell market leaders in their strong holds. TI faces an uphill task of pushing these combo chips into legacy designs that use best-in-class radios from other vendors.

Further advances in radio integration will lead to a WLAN/GPS/FM/BT combo chip. The consensus is that this is at least a few years away. Until then, TI will have a tough time selling to smart phones, which tend to have a dedicated GPS and a BT/FM/WLAN combo chip. TI does not have a dedicated GPS chip.

Betting on NFC

In all this, TI is betting big on BT. The product line for connectivity chips builds on the basic BlueLink line (BT+FM). WiLink adds Wi-Fi to BlueLink, and NavLink adds A-GPS to BlueLink. The announced products in these lines all have FM transmission for near field communication (NFC).

In addition to pushing Bluetooth “classic” in the above products, TI is pushing low-energy (BT LE) and high-speed variants (BT 3.0) as well. TI was the first vendor to demonstrate BT 3.0, which allows BT devices that also support Wi-Fi to achieve Wi-Fi transfer rates without the associated higher power of Wi-Fi.

TI recently demonstrated BT LE chips, both dual mode (BT classic/BT LE) and single mode. The aggression is seen in providing single mode chips with a royalty-free software stack. While dual mode chips target phones and computers, single mode chips are aimed at low-cost and low-power devices that are otherwise not networked. The possibilities of networking such devices is not clear; yet, it can only be good for their efficiency and effectiveness. CSR is the only other vendor to promise both dual mode and single mode BT chips.

In addition, TI is also furthering the trend of RF to replace wired connections. The above moves augur well in the ongoing machine-to-machine (M2M) and low-power connectivity trends.

DSP: Wireless Infrastructure Play

Without much baseband IP to rely on, TI is pushing its DSPs and analog offerings for 4G infrastructure needs.

LTE infrastructure market is estimated to be $8.5 billion by 2012. TI’s play in this market is limited to providing powerful DSPs to support complex algorithms and analog parts. In February, TI claimed that its 1GHz TCI6487 is “used in eight of the top ten LTE OEM systems going through development, lab, and field trials”.

TI also has all the silicon necessary to build both residential and enterprise FemtoCell products. The WCDMA software to run on the DSPs must be licensed from elsewhere, though.

Analog and Power Management

As Vijay Nagarajan pointed out in his 2008 TI series, TI still rules in high performance analog (HPA). This segment still remains a big growth engine. Revenue from Analog was down slightly in 2008. Analog revenues were down 35% in 1Q09, 23% in 2Q09 compared to year ago levels. This, combined with a projected 21% drop in the worldwide analog semiconductor market, does not bode well to this units fortunes this year.

At every possible opportunity, TI stresses that Nokia’s multi-sourcing strategy will help its Analog division, among others. A lot depends on this unit’s fortunes to help TI offset baseband revenue loss. But all indications are that it is unlikely, at least for this year.

Life is analog. Most signal processing is digital. Continuing digitization augurs well to analog suppliers. Power amplifiers and data converters play a crucial role. This unit remains a promising growth engine.

With the ever-growing need to squeeze more out of a mobile device, power management plays an important role. All those countless hours of effort to optimize various algorithms to consume less power will go waste if the device-level power management is not smart, or if unused parts of hardware are not turned down. Turning off the screen based on proximity is a good example. TI has proven power management solutions. Thanks in part to power management, we have come to expect new models to provide increased usage time. TI won the power management slot, among others, in the Palm Pre, and several BlackBerry phones.

Beyond Phones

When it comes to smart phones, TI subscribes to what is called the “dumber PC model”. While ARM wants to be the Intel of smartphones and mobile devices, TI wants to do the bulk of ARM’s physical delivery. TI actively pushes OMAP lines of products to Mobile Internet Devices (MID), which is a category to bridge the gap between smart phones and netbooks. TI processors built around ARM cores are pushing to be the brains behind many such devices touting the power-sipping nature of ARM cores.

Phone-on-a-chip, Except the Baseband:

While the industry moves towards adding connectivity radios to the baseband processor to build an efficient SoC, TI is betting on the opposite. Some think that this is a big risk. TI should take a leaf out of ST’s Cartesio+ book. Cartesio+ is a application processor plus GPS SoC for in-car and personal navigation markets. TI should look to provide SoCs combining its powerful OMAP parts and communication radios. A matrix of various OMAP parts against various combinations of radios would result in an portfolio that can serve different market and device needs. It would not be a huge surprise if such a plan is already in the works.

While others rally around beefing up SoCs’ centering baseband processor, TI could lead the way in SoCs’ centering application processor. Device makers would still need to shop elsewhere for a baseband part. With such an offering, current OMAP-based designs would save space and power. Think Palm Pre with fewer parts.


I will be watching in which direction Nokia’s share of TI revenue goes in the next few years. TI hopes that the loss in baseband revenue will be compensated by increased demand for other products. A boost to dedicated application processor, and increased sale of analog products due to multi-sourcing plans from major customers might close the gap. However, with the current state of the analog market, it seems unlikely in the short term.  Analog continues to be a strong growth engine for the long term.

The wireless division’s fortunes ride heavily on the direction taken by application processor market in the next few design cycles. Connectivity solutions might not provide a big boost in the short term. However, TI’s emphasis on various NFC technologies will add to the bottom line as the convergence movement starts to integrate and interact with more devices at home. Provided they get the design wins.


Written by Nalini Kumar Muppala

August 13, 2009 at 2:07 pm

Posted in Texas Instruments

One Response

Subscribe to comments with RSS.

  1. […] the low-cost phone market was shaping up, ST-Ericsson (in its previous avatar), Infineon, and TI all had chipsets that catered to low-cost phone makers. In some cases, MediaTek’s offering was […]

Comments are closed.