Nalini Muppala

Analysis, observations, perspectives on mobile space

Infineon: Wireless Strategy And Outlook

with 3 comments

In this concluding part, I will provide some pointers on what we might expect from Infineon in wireless semiconductors for handsets.

Infineon is in an enviable position with four of the top five handset makers as customers. Déjà vu? You recently heard it in this space in the context of ST-Ericsson. However, in addition to the above, Infineon also supplies to Apple and RIM – the two smartphone makers on a roll even in this year’s market turmoil. Sure, Infineon only provides a few parts to a just a few of the devices coming out of these vendors. But it has the reach to coax the big guns into buying exciting parts and solutions it can offer in the future. Infineon should leverage this reach.

Although the company does not have all the pieces, Infineon’s management understands the convergence trend. It is a concern that the road map does not show any signs of building a complete portfolio for convergence. Forming partnerships or JVs to fill the holes in its portfolio should be an important priority. The time is ripe for action on this front.

Infineon hopes to gain a lot by riding the trend to save costs using single-chip solutions. AsThe Economist points out, the industry has been driven for a long time to provide more capabilities at the same price. And Infineon notes that advances in technology have pushed costs low enough such that 50% of the world’s population now own a mobile phone. Further reductions in cosst will bring a phone within the reach of the still unserved. Infineon needs to cash on this renewed push to provide features at lower prices.

As mobile devices are the only mode of connectivity for many in developing countries, users would be inclined to use higher data rate services and once they get the taste of the value provided, will be inclined to upgrade – say from a GSM phone to a GPRS phone or from a GRPS phone to a low-cost 3G phone. Infineon is well positioned to ride this wave. It faces stiff competition from ST-Ericsson and MediaTek, which will likely lead to pricing pressures and lower margins.

A combined communication processor or a discrete baseband+application processor — whichever direction the industry takes, Infineon will have to depend on others to compete. We noted else where that Marvell is losing to Qualcomm at RIM. Infineon has to battle Marvell and Qualcomm to hold onto and increase the number of its design wins at RIM.

Although Near Field Communication (NFC) is still a nascent market, Infineon has strong presence in it. The company provides solutions to improve the security of transactions. This augurs well if the recent churning in machine-to-machine (M2M) space sees sustained uptake. With its expertise in power management and security, Infineon is positioned well in this area. However, recent moves by Qualcomm in the M2M space portend a tough competition.

With the company’s financial distress becoming less acute, increasing share at customers looks to be the priority, and the prospects are encouraging even if not outright rosy. It appears that Wireless Solutions will have to do a lot of the heavy lifting to pull Infineon out of its current slump, but it just might happen.

[Originally for Sramana Mitra on Strategy.]

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Written by Nalini Kumar Muppala

October 4, 2009 at 6:50 am

Posted in Infineon

Tagged with , , , , , , , , ,

3 Responses

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  1. Hi Nalini,

    Congrats for wonderful article. One point i see where apart from strengthening there connectivity business infineon need is to improve is there multimedia capability and integrating Cortex A9 processor and reaching higher cpu speeds.
    This is needed because going forward internet contents viewing will increase multiple fold and this will require even great multimedia capabilities.
    One more point we should remember is companies might fall back to dual chip solution for the product ranging above 150$ because wireless technologies are different in different part of world like (WCDMA, GSM/GPRS/EDGE, TDSCDMA & LTE) but multimedia will remain same.
    Thanks,
    Achobs..

    achobs

    October 11, 2009 at 11:18 pm

  2. Thanks Achobs.

    Given the lack of activity in application processor in general and not being a licensee of ARM cores ever, it seems unlikely that Infineon will take the plunge now to build exciting parts around ARM cores.

    Hence I see alliances and partnerships with others application processor vendors as a viable option.

    Nalini Kumar Muppala

    October 12, 2009 at 9:30 pm

  3. […] 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 […]


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