Q, Gunning For #1>
With $850 million in chips going out, vendor climbs into
second place -- Qualcomm gains ground in ranks of the
fabless
SATURDAY, NOVEMBER 06, 1999 1:43 AM
- CMP Media
Nov. 05, 1999 (Electronic Engineering Times - CMP via COMTEX) -- PALM
SPRINGS, CALIF. - Qualcomm Corp., already ranked as the second-largest
fabless semiconductor company by Dataquest Inc., reported last week that its
chip set sales rose 29 percent in fiscal 1999. Qualcomm is expected to ship more
than $850 million worth of chips this year, and with the wireless data opportunity
largely still ahead of it, the San Diego company could become the largest fabless
semiconductor vendor overall.
Growing its chip set sales by 80 percent in 1998, Qualcomm came out of nowhere
to become the second-ranked vendor on Dataquest's list of fabless chip makers,
after Altera Corp. but ahead of the company that in many ways jump-started the
fabless trend in the 1980s, Xilinx Inc.
In reporting its fiscal 1999 results last week, Qualcomm said that revenue from its
chip set division, called Qualcomm CDMA Technologies, totaled $1.133 billion,
including chip sets, system software and tools. That's up from $880 million in
fiscal 1998.
Despite difficulties in getting enough chips from its foundry partners, Qualcomm's
chip revenue went up 29 percent for the fiscal year that ended Sept. 31. Overall,
Qualcomm had revenue of $3.9 billion, an increase of 18 percent during fiscal
1999, despite the sale of its CDMA infrastructure business to Ericsson.
This was the first time Qualcomm broke out its results by segments, including
four major categories: chip sets, licensing, wireless systems and consumer
products. The company took the step to meet the segment-reporting requirements
spelled out by the Financial Accounting Standards Board.
Dataquest said that Qualcomm's semiconductor revenues in 1998 were about
$639 million, or about 72 percent of the company's technology division, with
software and tools accounting for the remaining 28 percent. That formula would put
Qualcomm's chip revenue at about $820 million for fiscal 1999, and significantly
more for calendar year 1999.
Dale Ford, principal analyst at Dataquest for application markets, said about 270
million wireless handsets will ship worldwide this year, rising to 600 million units in
2003.
"Digital cellular handsets are now the highest-volume consumer product," Ford
said, speaking at the Dataquest Semiconductors '99 conference here. While some
might doubt that the world population of about 6 billion could consume as many as
600 million cellular handsets in 2003, Ford said, "The wireless phone industry has
always found an ability to exceed the expectations of forecasters."
The first of the third-generation (3G) wireless phones, based on CDMA technology,
are expected to ship in Japan in the second half of 2000. It will be 2005 before the
3G phones take off in the United States and Europe, Ford said. However, in the
interim, use of so-called 2.5-generation phones will accelerate, offering data rates
that are adequate for wireless e-mail.
Johan Lodenius, vice president of marketing at Qualcomm CDMA Technologies,
said the 3G phones are expected to offer different levels of data transmission.
Qualcomm's 3G CDMA phones will support voice and packet data at 144-kbit,
384-kbit and 2-Mbit/second capabilities. "We believe that 144 kbits per second will
be fast enough for most applications," said Lodenius.
Once a multimode wireless standard settles down, notebook computer
manufacturers will have the incentive to add wireless data capabilities. Business
people increasingly need access to financial and market data that is accurate and
up-to-the-minute. "Information that is an hour old is of no value. Wireless will be
essential," Lodenius said, as people go to the Web from wherever they might be.
Lodenius said Qualcomm is developing chip sets that serve three widely defined
markets.
Markets evolution The so-called "man-to-man" market of voice and data modem
applications will target small handsets, ranging from 90 grams down to 50 grams,
or even smaller for watch-size wireless phones. Eventually, this man-to-man
market will become saturated at about 60 percent market penetration.
Starting in the next millennium, wireless capabilities will be offered in nearly all
PDAs and notebooks, supporting client-server access over corporate intranets and
the World Wide Web. Over the next decade, penetration rates of 90 percent will
be accomplished for this "man-to-machine" market of mobile computers.
Finally, a "machine-to-machine" market will emerge that will use wireless "thin
channel" links for remote-controlled automation, banking and brokerage systems,
vending machines, surveillance and in-home smart appliances.
This new wireless market will achieve penetration rates exceeding the population
of the industrial world, with each human supported by three or more machines with
wireless capabilities, Lodenius predicted.
By: David Lammers
Copyright 1999 CMP Media Inc.
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