Chip giant Texas Instruments Inc. (NYSE: TXN) took the wraps off a new digital signal processor for femtocells today, which marks the company's official entry into the fledgling home base station market.

But while the chip maker is committed to femtocells, the firm is not ready to devote R&D money to developing specialized, cost-optimized silicon right now because the femtocell market is too fragmented. TI believes such femto-specific silicon will be needed at least two years from now when volume deployments will start to ramp up.

"Femtocells are very fragmented and at a very infant stage," says Josef Alt, business development manager of the communications infrastructure group at TI. "If you have a cost optimized solution today, you end up having it tailored to something and make some compromises... There's great value in having a product here to adapt to various requirements of the market."

The big question now for Texas Instruments is about "when, not if" the femtocell market will take off, says Alt.

TI believes femtocells will ship in volumes -- that is, multiple millions of devices -- in 2010 or later, and not before. This market timeline matches results from a recent Heavy Reading operator survey, "Femtocell Deployment & Market Perception Study," in which 38 percent of respondents said they planned to launch femtocell services by the end of 2010, and 33 percent planned femtocell service launches in 2011 or later. (See 2010: Year of the Femto.)

"Delaying the point at which you introduce optimized silicon is logical given some of the uncertainties around femtocells, but at the same time, low cost components are critical to building devices with mass-market price points," says Gabriel Brown, senior analyst at Heavy Reading. "Operators need to be confident femto device price point targets will be met to justify their own investment."

The digital signal processor (DSP) product TI introduced today, the TCI6484, is flexible in that it is not dedicated specifically to femtocells or to any air interface standard. It can be used for any size base station from macrocells to femtocells and supports GSM, EDGE, WCDMA, TD-SCDMA, HSPA, HSPA+, LTE, and WiMax.

The 6484 DSP has integrated MAC and PHY functionality on a single core, processing capacity of up to 34 Mbit/s, and a "wide range of peripherals" to support different customers' architectures.

According to Alt, a femtocell based on the new DSP would have a total bill of materials of $200. That's some way away from the magical sub-$100 price that operators seek, but Alt says that price range "makes sense with high volumes." And that won't be before 2010, in TI's view. (See Vodafone CEO Seeks Cheap Femtos and PicoChip Unveils Low-Cost Femto Chip.)

"It's better to have a product with flexibility and allow customers to develop their applications on it, and offer a migration to a product more suitable to $100 [BOM]," says Alt. "It's not an easy judgment to make. You have to be at the right point in time."

The 6484 will go into volume production early next year.

But TI claims that it is already the market leader in femtocell chips because of the number of vendors that use existing TI technology in femtocell products that are shipping today, including Airhop, Airvana Inc. , Huawei Technologies Co. Ltd. , Lyrtech, Samsung Corp. , and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763).

Having the weight of TI behind the new technology will no doubt give the young femtocell market a boost.

"TI is the leading silicon supplier for mobile base station products, so its commitment to femtocell is good for the market as whole," says Heavy Reading's Brown.

— Michelle Donegan, European Editor, Unstrung