Texas Instruments exits competitive DVD chip market
[NOTE: TI was involved in DVD "controller" chips, not "decoder" chips, which are entirely different and more complex.]
By Stephan Ohr
EE Times
(10/15/99, 10:41 a.m. EDT)
TUSTIN, Calif. — Texas Instruments Inc. has quietly decided to fold its
current efforts in digital video disk components to turn its full attention to
chips powering hard-disk drives. The move, which involved the layoff of 189
people from TI's Storage Products Division, is the latest sign of ongoing
struggles in the market for interface components for DVD-ROM drives.
Suppliers are finding this market a tough nut to crack. While Cirrus Logic
Inc. (Fremont, Calif.) is claiming success with highly integrated read-channel
and controller chips, other manufacturers are pointing to slower than
expected ramp rates and intense competition. And even Cirrus acknowledges
that the sale of computer-based DVD products has been stunted by the large
cost delta between DVD-ROM and CD-ROM drives, and a lack of
compelling DVD applications.
Early forecasts suggested such drives would totally displace CD-ROM drives
in desktop computers — to the tune of 100 million units per year — by 2002,
said John Lee, vice president of marketing for Cirrus' Optical Storage
Division. But demand has been stifled by a lack of software in the
DVD-ROM format, he said. Moreover, users are only willing to pay a few
dollars more for DVD-ROM over CD-ROM, not the $40 cost differential
that now characterizes the market.
Severe competition
TI's storage group was developing ICs for what it called "comby drives" —
computer-based optical-disk drives that could read DVD-ROMs and
read/write CD-ROMs as well. Market figures for these drives were overly
optimistic and the competition was severe, a TI spokesman said. Besides
Cirrus, other chip makers building DVD-ROM controllers include LSI Logic,
Philips Semiconductors and Media Tech in Taiwan.
Analyst Will Strauss, who tracks the storage IC market for Forward
Concepts (Tempe, Ariz.), confirmed TI's need to devote resources to ICs for
hard-disk drives. Formerly No. 1 in read-channel ICs, TI has slipped to third
place behind Lucent Technologies and Cirrus, he said. This market is
increasingly dominated by "superchips" that integrate both read channels and
disk controllers, an arena in which TI was playing "catch-up" to Cirrus Logic,
said Strauss.
With design wins at Sony Corp., Cirrus similarly appears to lead in ICs for
DVDs, Strauss said. But casualties among the contending IC suppliers are
not suprising. "The early forecasts were a lot rosier than they are now,"
Strauss said.
Only 12.4 million DVD drives will ship in 1999, most of them — some 8
million — DVD-ROM drives for computers. And many makers of consumer
DVD players — including Toshiba and Matsushita — are vertically
integrated and thus build the key components of those drives in-house.
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