Nvidia said it will wind down its Icera cellular baseband operations in the second quarter of fiscal 2016, which will end this summer. The company said it is open to a sale of the technology or operations.
Nvidia's decision to exit of the cellular modem market is another indication of the difficulty that smaller competitors face in handling the market dominance of Qualcomm (NASDAQ:QCOM), as well as other strong players like MediaTek and Intel. Last year Broadcom decided to exit the baseband market after concluding it was losing too much money. In 2012 Texas Instruments got out of the baseband business.
According to a recent report from research firm Strategy Analytics, Qualcomm, MediaTek, Spreadtrum, Marvell and Intel grabbed the top five baseband revenue share spots in 2014. Qualcomm finished 2014 with 66 percent revenue share, followed by MediaTek with 17 percent revenue share and Spreadtrum with 5 percent revenue share.
In 2011 Nvidia purchased Icera for $367 million in cash as a way to get its integrated chips into smartphones. Its integrated chips combine application processors with modems. However, outside of a handful of design wins, Nvidia never really made headway in the integrated System-on-a-Chip market or in the baseband market. Although Nvidia got its Tegra 4i chip with an LTE modem certified by AT&T Mobility (NYSE:T), the company could not cut into Qualcomm's market lead.
Over the past few years Nvidia, the leading graphics processor provider, has refocused and reshaped its strategy on what it calls "high-growth opportunities" in gaming, automotive and cloud computing applications.
Nvidia said the Icera 4G LTE modem will meet the company's needs for the next year or more, but that going forward, the company expects to partner with third-party modem suppliers and will no longer develop its own baseband products.
The Icera modem operation has around 500 employees, based primarily in the UK and France, with smaller operations in Asia and the United States, Nvidia said.
For more:
- see this release
- see this Bloomberg article
- see this WSJ article (sub. req.)
- see this The Verge article
- see this Re/code article
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