Chipmakers seek growth via smartphone team-ups

With the adoption of smartphones increasing exponentially, chipmakers have identified this market as a key battleground. Collaboration and the ability to provide customization will be key to differentiating their customers' offerings as a means to gain market share.

Research firm, IDC, stated in a February release that the number of smartphones shipped in the last quarter of 2009 hit 54.4 million devices, a 39 percent increase on the previous year's figures. Its analyst, Flint Pulskamp, added in an e-mail that the smartphone semiconductor BOM (bill of materials) revenues will reach US$18.86 billion, and this is about 42 percent of the total mobile phone BOM revenue of US$44.57 billion expected this year.

It is in this growing market that chipmakers such as Globalfoundries, United Microelectronics Corporation (UMC) and Intel are looking to play and succeed in.

Said Jason Gorss, spokesperson for contract chip manufacturer Globalfoundries: "We see wireless applications and devices [such as smartphones] as the most strategically important market to fuel our long-term growth. The race to deliver chips with higher performance, more features and functionality, and increased power efficiency is more competitive than before."

To make a mark in this competitive arena, Globalfoundries, which entered the fray only in 2009 but has become one of the top contract chip manufacturers worldwide, is looking at collaborations with key partners to boost its standing.

Gorss told ZDNet Asia in an e-mail that the company will be partnering closely with industry leaders in mobile processors such as ARM to deliver system-on-a-chip (SoC) platforms. This will allow mobile device manufacturers to adopt new technologies faster and with "more compelling increases in performance and power efficiencies".

"For example, our latest collaboration on 28-nanometer HKMG (high-K metal gate) technology and ARM's Cortex-A9 delivers an approximate 40 percent improvement in performance, while reducing power consumption by 30 percent," he added.

However, fellow foundry player UMC is taking a different path. According to the company's spokesperson, it is working very closely with various customers to come up with customized products that will meet their needs.

"Most customers need differentiated technology to distinguish their products from others, and we are demonstrating our capability to tailor processes to fit our customers' needs," said Richard Yu, corporate communications manager, UMC, in an e-mail response.

He added that the company's revenue share from communication products "was more than 60 percent" in the fourth quarter of 2009, and it is hoping to evolve its business and technologies through customer feedback and interaction.

According to Adam Leach, Ovum's practice leader for devices, chipmakers should focus on "high-performance architectures that can scale up to meet demanding needs of multimedia and gaming, yet can conserve battery life and scale down when performance is not needed".

He also thinks Intel, which only recently announced its move to enter the mobile chip field, will have to play catch-up with current market leader ARM. The latter possesses the rights to the chip design used in most smartphones and licenses that technology to manufacturers such as Globalfoundaries, according to the New York Times.

"Intel has some way to go before it can match the power and performance ratio of chips manufactured using ARM's architecture, and it will take a few years before Moore's Law will allow [the company] to compete," said Leach in his e-mail. This reiterates the point made in an earlier ZDNet Asia report on Intel's intentions for the smartphone market.

Responding to this, Intel spokesperson Barry Sum said of the chip giant's strategy to playing this field: "We are using a combination of architectural, design and leading-edge manufacturing process enhancements, as well as feature integration to build the right products for the right segment, at the right price.

"We're comfortable with our approach and believe Intel Atom to be a compelling alternative for delivering the full Internet experience today and in the future. The software compatibility of the Atom platform also makes it possible to run all of the richness and interactivity of the Internet that we have come to expect on a PC," he added.