The Smell Of Victory>
News article received, Saturday, February 06, 1999 12:41:08 PM EST
Host of suppliers claiming victory in CDMA arena -- But product similarity leads to
fear of impending price war
Feb. 05, 1999 (Electronic Buyers News - CMP via COMTEX) -- Silicon Valley- Having struggled to get their
products out the door last year, several companies this week will finally show or ship their first single-chip
baseband controllers for CDMA (Code Division Multiple Access) handsets in an effort to break Qualcomm
Inc.'s monopoly in this IC market.
At this week's Wireless '99 trade show in New Orleans, the new suppliers in this arena-DSP
Communications Inc. (DSPC), LSI Logic Corp., Sony Corp., VLSI Technology Inc., a Mitel
Semiconductor/PrairieComm Inc. team, and others-will all claim victory in shipping one of the industry's first
CDMA baseband controllers.
These chips, used to perform analog-to-digital conversion, speech processing, and other critical control
functions, are built around what has become the de facto standard in CDMA chips-an ARM7 RISC core from
Advanced RISC Machines Ltd.
Since the new parts appear to be alike, analysts are left to wonder if suppliers will engage in a price war to
garner business. "The new chips will certainly give OEMs more, and less expensive, choices," said Andy
Fuertes, an analyst with Allied Business Intelligence Inc., Oyster Bay, N.Y.
Indeed, San Diego-based Qualcomm has for years commanded a huge premium as the sole supplier of
baseband controllers for its own CDMA handsets and those from Samsung, Sony, and other OEMs.
But the party could be over for Qualcomm-which, in an unrelated event, last week laid off 6% of its workforce
in an effort to cut costs. Qualcomm also announced a new controller line last week, but the company is
quietly losing its one key chip customer-Sony.
At Wireless '99, Sony will show a new CDMA handset that incorporates its own controller, a company
spokesman said. Sony, which will not sell this chip on the open market, in the past used only Qualcomm's
controllers in its handsets, the spokesman noted.
Other companies, including DSPC, LSI Logic, VLSI Technology, and Mitel/PrairieComm, may find some
new, huge opportunities for sales of their devices in the merchant market.
The worldwide subscriber base for CDMA cellular services will total about 65 million by next year, more than
quadruple the 1998 figure of just over 15 million users, according to In-Stat Inc., Scottsdale, Ariz. The
worldwide subscriber base for all cellular services will double during that interval, from about 300 million in
1998 to just over 600 million by 2000, the firm said.
CDMA, however, is still playing catch-up with a competing standard-GSM (Global System for Mobile
Communications)-whose worldwide subscriber base will grow from nearly 150 million in 1998 to just over 300
million by 2000, In-Stat said.
On the CDMA-component front, DSPC appears to have a slight lead among third-party suppliers. This week,
DSPC will begin sampling the D5421, which integrates an ARM7 RISC-chip core and the Oak DSP chip
from the DSP Group Inc. (unrelated to DSPC).
"Some of our competitors are making similar claims, but we're the only company shipping [CDMA parts]
besides Qualcomm," said Arnon Kohavi, DSPC's vice president of business development.
LSI Logic and VLSI Technology, meanwhile, have each begun shipping similar parts. LSI's CDMA chip,
offered in a 208-pin miniBGA package or a 280-pin chip-scale package, is sampling for less than $30, said
Todd Nash, product marketing manager for the Milpitas, Calif.-based company.
The device to be shown by the Mitel/PrairieComm duo is the result of a CDMA-chip co-development
agreement that was forged last year between the two companies.
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