Nalini Muppala

Analysis, observations, perspectives on mobile space

Near Field Communication: Hardware Vendor Strategies (Part 3)

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The Nokia Factor

In spite of the recent turmoil in handset vendor market, Nokia is still the dominant player. After the company announced its intention to add NFC to all its smartphones in 2011, other players have had to ramp up their NFC plans even if they were reluctant earlier. Apple and Qualcomm are reported to have hired NFC experts.

Nokia, Samsung, and Sagem have made NFC-enabled phones in the past, but the NFC capability of a majority of these phones has been limited to field trials.

NFC Vendors

A variety of solutions are available from vendors like NXP, STMicroelectronics, the UK-based NFC leader, Innovision Research & Technology plc and Denmark-based Polaric. These firms have been providing technology for contactless cards and infrastructure and are thus well positioned to ride the NFC wave.

Innovision could have been to NFC what ARM is to application processors. Alas, Broadcom snapped it up for $33 million in August. Broadcom had been working with Innovision for some time, and the momentum behind NFC seems to have prompted this move.

Even before being acquired, Innovision expected to carry NFC slots in 15%–20% of phones shipped in 2012. With the added momentum of Broadcom as the market leader in connectivity solutions behind it, the target seems within reach. After all those broken promises, this one might be kept. More so, if NFC morphs into existing combo-connectivity solution chips.

While Qualcomm has been less successful than Broadcom in connectivity solutions, it has been selling baseband platforms such as mobile station modem (MSM)  and Qualcomm Single Chip (QSC) chipsets at a brisk pace. Qualcomm is an investor in Inside Contactless, a maker of contactless and NFC platforms based in France. This collaboration has enabled Qualcomm to offer NFC handset reference designs for MSM and QSC platforms. It is no coincidence that Inside Contactless claims or holds some essentials patents for NFC.

Texas Instruments, on the other hand, has been less than enthusiastic about NFC in phones. TI is the world’s largest integrated supplier of radio frequency identification (RFID) ICs – the bulk of the 500 million devices that TI has sold thus far were used in asset tracking and contactless payments. TI’s connectivity solutions have been well received. It would not want to miss on NFC. I expect TI to offer a combo-connectivity chip with NFC soon after Broadcom does.

Shanghai Fudan Microelectronics Co. is a big supplier for Chinese MNOs and manufacturers. It has little presence outside China and needs design wins from global Tier 1 handset vendors to expand.

Combo Chip

When a design incorporates multiple connectivity solutions, instead of adding a discrete chip for each of them, combo chips are used to save valuable space inside a phone. Various combinations of BT, WLAN, GPS, and FM are available from several vendors. NFC will surely follow suit.

By 2012, NFC in a combo chip is estimated to cost $1 down from the current level of $5 for a discrete part.

Ultra Low-Cost

The lack of interest in NFC from ultra low-cost (ULC) platform vendors like ST-Ericsson, MediaTek, and Infineon is troubling. Infineon has interests in NFC as part of its secure card business. ST-Ericsson offers NFC as part of its connectivity solutions. Ironically, it is this segment that could benefit the most from NFC. NFC could be the gateway to financial services for the unbanked and under-banked sections of low-income countries.

Low-end and ULC phones do not offer multiple connectivity options and thus do not use combo chips. NFC will need to be added to a baseband chip or may even exist as a separate chip.

Open API

NXP, Inside Contactless, and Stollmann opened up their NFC application programming interface (API). This will allow device makers and application developers to build and innovate faster without losing time to implementation and integration minutiae. The basic firmware is seen as a commodity. The real value is in creating innovative applications; what better way to do this than to tap into wisdom of the crowd?

Transition Time

In the short term, companies specializing in NFC will benefit until the big players and familiar names of mobile semiconductor vendors like Broadcom, Qualcomm, and TI start adding NFC to their platforms and/or integrate into their other chipsets.

Apple will likely use NXP for the first iteration and switch to Broadcom thereafter. BRCM already has the BT/WLAN combo connectivity slot in iPhone and iPod Touch, and the GPS slot in iPhone 4. The chances are better if Broadcom succeeds in integrating NFC into a combo-chip. For this reason, Broadcom’s acquisition of Innovision could have been cheered by Apple behind the scenes.

Smartcard IC vendors will see a mixed bag. If a mobile phone is to replace several payment and ticketing cards, fewer smart card ICs would be used. On the other hand, they could sell more value-added secure modules.

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Written by Nalini Kumar Muppala

October 11, 2010 at 5:00 am

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