ST-Ericsson (Part 2): Diverse Offering

By Guest Author Nalini Kumar Muppala

Following yesterday’s introduction to ST-Ericsson as a company to be watched, today we take a look at its portfolio and consider some growth prospects.

Portfolio

Building on the strengths of EMP, the JV offers platforms for entry level, feature and smart phones. In addition the JV offers individual components to be used in other platforms. The strategy is evident in their claim, “A total solution or its individual parts”.

The product portfolio needs to be streamlined. Consolidating operations from such diverse, overlapping portfolios efficiently was a daunting task from the get-go. The savings and synergies, where they exist, have to be found while continuing to support all products at various customers in the short term, as was done prior to the JV. The challenge will be to choose the best solution where there are overlaps. After electing what should thrive, the company needs to convince existing customers to move to such offerings.

Just Wireless Handsets

While forming this JV, the parents retained access to some technologies that were not exclusive to mobile handsets. For example, STM continues to have access to Nomadik application processor, and recently announced Cartesio+, a single-chip solution that combines GPS and an application processor for media processing; NXP continues to be a big player in NFC and AM/FM tuners; and Ericsson recently launched a mobile broadband module specifically designed for netbooks. Thanks to such plays as STM, NXP held on to the top two positions in automotive infotainment IC space. STM continues to be a major force in accelerometers and gyroscopes, and it reminds us of its value-add for mobile phones with the recent announcement of a battery monitoring IC.

Baseband

Owing to their shared lineage, ST-Ericsson will become the dominant supplier to Sony-Ericsson. In addition to design steals at Sony-Ericsson, ST-Ericsson stands to gain market share and revenue from TI due to the latter’s winding down of merchant baseband business. ST-Ericsson is one of just four companies with more than 5% baseband market share. Earlier, Nokia added ST-Ericsson as another 3G baseband supplier.

ST-Ericsson has a portfolio that covers 2G, 2.5G, and 3G technologies and a road map that includes LTE. While the JV has good momentum in high-end phones and feature phones, at the low end it has to compete with the likes of a very aggressive MediaTek. 

Major handset makers are ramping up their smartphone offerings. As an example, LG recently announced plans to release a total of 13 Windows Mobile-based smartphones by the end of 2010. Courtesy of the strong relationship between EMP and LG, ST-Ericsson should have a big part of this business.

Owing to these factors, ST-Ericsson will likely continue to gain baseband market share. 

Application Processor

ST-Ericsson stood at a distant fourth position, taking 9.4% of the standalone application processor (AP) revenue in 2008. The JV chose STM’s Nomadik application processor over NXP’s Nexperia and EMP’s tradition of sourcing from TI. ST-Ericsson entered into a pact with Nokia to provide APs using ARM’s latest offering, Cortex-A9, for 3G handsets and smartphones based on the Symbian S60 platform. 

Many of the JV’s platform offerings are built around a Nomadik + baseband communication processor. Given this increased opportunity for Nomadik, ST-Ericsson’s standing in the AP market should improve, partly at the expense of TI’s OMAP processors. 

Tomorrow’s post continues with the portfolio analysis.

This segment is part 2 in the series : ST-Ericsson
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