Chipset vendors, especially those in the $4.5 billion mobile application processor market, are in an increasingly difficult battle to differentiate their offerings--even as they all work to stay ahead of the curve on processing power and performance.
The fight is fiercest among companies licensing or building on top of architecture from ARM Holdings, including Qualcomm (NASDAQ:QCOM), Nvidia, Samsung and Texas Instruments. However, unlike a year ago, when silicon suppliers were gearing up to pump out chips for smartphones, ARM licensees today have had to shift gears to make their solutions work for tablets as well as smartphones, due to the success of Apple's (NASDAQ:AAPL) iPad. That shift has created an opening for Nvidia and its dual-core Tegra 2 processor--the company hopes to exploit its early lead in tablets.
Meanwhile, lurking in the background is chip giant Intel, which has indicated it will compete directly against ARM licensees in smartphones and tablets after years of sitting on the sidelines.
"Obviously our partners are highly competitive with each other, which is good from the perspective of the OEMs and the consumers," said James Bruce, ARM's mobile segment manager. "They all have different capabilities. That really drives differentiation in the market. I'm sure our partners look at each other to see how they can do better."
But each ARM licensee comes from a slightly different background, and each has its own story to tell.
Upstarts and incumbents
Nvidia, which has a rich heritage in computer graphics, was the first to market with a dual-core processor, and consequently has scored a number of key design wins. The dual-core Tegra 2 chip is powering the first wave of tablets running version 3.0, or Honeycomb, of Google's (NASDAQ:GOOG) Android platform, and also is in a range of high-end smartphones such as Motorola Mobility's (NYSE:MMI) Atrix and Droid Bionic and LG's G2X.
"We build full systems. We built multi-core processors," said Nick Stam, Nvidia's director of technical marketing. "TI and Qualcomm have never shown that--that they know how to build seriously multi-cored devices and the software that controls them all. So as we look down the road, our advantages will increase tremendously because of years of experience."
Nvidia will have its quad-core chip in a tablet on the market by August and in a smartphone by year-end. The company argues that as gaming and graphics become more integral parts of the mobile computing experience, its advantages will increase. But other vendors sharply disagree.
Qualcomm recently unveiled its dual-core and quad-core Snapdragon chipsets, and Raj Talluri, vice president of product management for Qualcomm's CDMA unit, said the company focuses on optimizing its cores for lower power consumption. "We can't compromise the battery life as we slap on more processors," he said. "Although we were late in dual-core, we can clock each of the cores separately." Qualcomm's chips power a number of high-end phones, including the HTC Evo 3D and HTC ThunderBolt.
Brian Carlson, the OMAP5 product line manager at Texas Instruments, acknowledged that there will be times when a company is ahead of everyone else is certain areas, but said that there should be a focus on not just the processing core, but what is built around it. Additionally, he said, while quad-core processors might sound fast and exciting, in reality there is a limit on the frequency the chip can achieve because the chip must route signals from four processors to a common place.
Texas Instrument introduced its OMAP5 processor, which leverages two ARM Cortex-A15 cores, just ahead of the Mobile World Congress trade show in February, and will be sampling the chip this year with devices shipping in the second half of next year. The company's OMAP line powers gadgets such as the Motorola Droid X and Research In Motion's (NASDAQ:RIMM) forthcoming PlayBook tablet.
TI is focused on competing on graphics integration, Carlson said, but also touts its achievements in power management, security and its ability to work with a wide range of modem vendors.
"I think overall what TI is focusing on is to try and excel in every domain," he said. "When we do an OMAP generation, we look across the board at everything that's out there. We think that our approach is a balanced approach. I don't think across the board any device matches OMAP in every vector."
"Having the best solution doesn't necessarily buy you that much," In-Stat's McGregor countered. "Having the first solution of that class buys you a lot. Time to market buys you everything."
Source: Texas Instruments
Basebands and applications processors
That said, even getting to market first might not equate to greater market share, if carrier and device priorities shift. "What if baseband becomes a big issue?" McGregor asked, hypothetically, saying that would open up the door more to the likes of Broadcom, Marvell, MediaTek and Qualcomm. "At this point, it's really hard to tell what those transitions are going to be. What if everyone holds off on quad-core?"
One of the key divisions among ARM licensees is marrying the application processor to the baseband chip--something Qualcomm excels at and that Nvidia and TI do not engage in. "Smartphones are hard to do well without an integrated modem," Qualcomm's Talluri said.
Source: Forward Concepts
Nvidia and TI disagree, arguing standalone application processors give OEMs and carriers greater flexibility. Analysts tend to think that the integrated solution will win out in the end, since historically carriers tend to like to work with one vendor and OEMs look for products that integrate Wi-Fi, GPS and Bluetooth into the application processor.
Source: Forward Concepts
While ARM licensees go toe-to-toe on multiple fronts, they may soon face a competitor that had $46.2 billion in revenue in 2010: Intel. Intel has been absent from the cellular market since it sold its XScale assets to Marvell in 2006. Since then, it has been working its way back, coming to the realization that the next wave of computing is in mobile.
Intel has said its Atom-based Medfield chipset will be in smartphones this year and its Oak Trail chipsets will be in tablets on the market this year. The main technical problem that Intel has historically faced in mobile is getting its power consumption down to levels comparable with ARM architecture.
Medfield will deliver better performance at competitive power levels compared to the competition, said Pankaj Kedia, marketing director of Intel's ultra mobile group. "You cannot look at one or the other. You have to look at them together."
Intel moved closer to a wireless comeback with its $1.4 billion acquisition of Infineon's wireless unit last year, which Kedia said gives Intel a major boost. "Having 3G and LTE capability in-house makes it easier for us to meet the needs of the customer," he said. "It makes it easier for us to do things like power management on the modem while we are delivering better performance on computing, graphics, video and audio." Intel will be able to deliver an integrated application processor and baseband chip solution, along the lines of what Qualcomm delivers, although it will not be able to provide CDMA modems.
Still, while Intel has vast resources its major challenge remains on the business side of the equation because ARM licensees have spent years developing relationships with carriers and OEMs. Kedia counters that Intel is in the right place at the right time since smartphones are essentially computers that happen to make phone calls.
Being late to market "has never been known to deter Intel," said Will Strauss, an analyst at Forward Concepts. "They're big enough, and certainly have lots of money. They could do a lot of things. It's a knock against them, but it may be something they can afford to overcome. They can afford to go for years without a making a profit."
"We take them (Intel) very seriously, and we'd like to see what they bring out to the market," Qualcomm's Talluri said.
Even if Intel doesn't make a big splash this year, there is still going to be a great deal of competition. "Every company is going to continue and try and show how they can differentiate themselves in their own IP," In-Stat's McGregor said. "There's not a single company out there that has knowledge in every part of these chips. I don't think you're going to see any time in the near future where you can hold one chip above the rest and say this chip is better than anyone else's."