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Comms chips

Freescale Gathers Software Muscle

Might today's ecosystem announcement from Freescale Semiconductor Inc. be a defensive move against the disappearance of Wind River Systems? Naturally, the company says no. (See Freescale Sets Alliances.)

It's true that the No. 1 real-time operating system (RTOS) vendor got bought by Intel Corp. (Nasdaq: INTC) last year. And on a smaller scale, QNX Software Systems got acquired by BlackBerry . (See Intel Tries the Comms Market, Again, Life After Wind River, and RIM Buys QNX.)

But Lisa Su, senior vice president of Freescale's networking and multimedia group, points out that Freescale has its own software division of roughly 1,000 engineers, and that Motorola Inc. (NYSE: MOT) -- Freescale's former parent company -- bought out embedded software company Metrowerks for $100 million back in 1999. So, it's not that Freescale is afraid of having no software partners left to play with.

What's really happening is that multicore processors, used in a variety of communications equipment but especially in base stations for 3G and Long Term Evolution (LTE), are getting really hard to program. Freescale and its software partners will build out their future plans in sync.

Freescale's three partners announced today are Enea AB , Green Hills Software Inc. , and Mentor Graphics Corp. The first two are RTOS vendors. Mentor Graphics' software is used to design chips, and while CEO Walden C. Rhines is always a good guy to hang out with (Hi, Wally), his industry doesn't really concern us here at Light Reading. (Sorry, Wally.)

Like any large company, Freescale already has a partner group it calls an ecosystem (of course), but today's announcement goes further. "This is more comprehensive in terms of the cross-sharing," says Su. "There's a higher need to have all the tools and software in place for these complex processors."

Freescale has been doing well lately: EE Times is even speculating the company, which was taken private in 2006, could go public again next year. (See Freescale's Silicon Sell-Off and Freescale Buy Finished.)

— Craig Matsumoto, West Coast Editor, Light Reading

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Pete Baldwin 12/5/2012 | 4:38:33 PM
re: Freescale Gathers Software Muscle

That EE Times story has some interesting data points about Freescale's finances. Revenue run rate of $4B, but debt of $7.4B. 


The idea is that an IPO would let them convert some of that debt to shares, or pay it off.  Meanwhile, Freescale is pushing some of the maturity dates further out.


Right now seems an opportune time for an IPO, and as EET points out, semiconductors are a cyclical business -- there's always a downswing en route.  I'm not sure they'll want to wait very long.

mukeshlulla 12/5/2012 | 4:38:32 PM
re: Freescale Gathers Software Muscle Craig, Mentor's ATI division makes the Nucleus RTOS, so it is also an RTOS vendor in the context of this news item. Not entirely a different industry from the other two, although granted - most of of the rest of Mentor Graphics makes software to design chips. (You are welcome, Wally!)
Pete Baldwin 12/5/2012 | 4:38:31 PM
re: Freescale Gathers Software Muscle

Ah! That makes sense, then. Thanks, Mukeshlulla!

Stevery 12/5/2012 | 4:38:30 PM
re: Freescale Gathers Software Muscle

Freescale has been doing well lately: EE Times is even speculating the company... could go public again next year.


And if they've been doing so well lately, why would they wait so long to go public?  Almost as if they're not doing well enough to go public right now...


Pete Baldwin 12/5/2012 | 4:38:26 PM
re: Freescale Gathers Software Muscle

Well, there was the recession, and they do carry massive debt, being a private equity project.


EET argues that Freescale is on the verge of GAAP profitability and that tech IPOs are acceptable again.


Separately from fitness, there's a window that's open: Semiconductors are strongly cyclical, so if things are up now, they WILL go down eventually -- so EET is arguing Freescale should try its IPO before that down cycle hits.

Stevery 12/5/2012 | 4:38:24 PM
re: Freescale Gathers Software Muscle

So a company that drove its stock price down so far (during the lowest interest-rate environment since we've been alive) that it got taken private now has suddenly grown a new forecasting brain and can see well enough that one year from now they will be IPO suitable.


I don't buy it.  In fact, I think its likely that at least one of the EET sources is conflicted.


Moreover, I think anyone who predicts any IPO one year out is missing several puzzle pieces on the macro environment.  Just as I mentioned we were in for a world of hurt a while ago, there are some large hurdles over the next 12 months.  Greece is just the first.

Pete Baldwin 12/5/2012 | 4:38:23 PM
re: Freescale Gathers Software Muscle

>So a company that drove its stock price down so far (during the lowest interest-rate environment since we've been alive) that it got taken private now has suddenly grown a new forecasting brain and can see well enough that one year from now they will be IPO suitable.


> I don't buy it.  In fact, I think its likely that at least one of the EET sources is conflicted.


Fair enough, I see your point. Some of this would depend on a strategy of taking the money and running, on the part of the private equity guys -- which could happen regardless of whether the IPO is smart for the company long-term.


I don't think EET is using sources to predict the IPO; it sounds like Bolaji Ojo's own analysis.




wallyrhines 12/5/2012 | 4:38:19 PM
re: Freescale Gathers Software Muscle Craig,
I've been negligent communicating to you about Mentor Graphics. Sixteen years ago, we acquired Microtec, one of the 3 largest embedded software companies at the time. Since then, we've been growing our capability. Chances are more than 50% that you are carrying a Mentor Nucleus real time OS in your cell phone. And if you're interested in Android or the open source community, you've probably talked with Mentor people (formerly Embedded Alley). Mentor's emphasis on embedded software continues to increase because of its importance in developing complete products--hardware design is only part of the task and rapidly becoming the smaller part. Hope we can talk about embedded software sometime -- it's one of my most exciting missions.
Pete Baldwin 12/5/2012 | 4:38:13 PM
re: Freescale Gathers Software Muscle

Wally, thanks for posting - and what a pleasant surprise.  Thanks for filling me in on Mentor's embedded software work.  I've followed the sector only peripherally and wasn't aware of how much Mentor had done there.  Great to hear from you!

Stevery 12/5/2012 | 4:38:10 PM
re: Freescale Gathers Software Muscle

Mentor's emphasis on embedded software continues to increase because of its importance in developing complete products--hardware design is only part of the task and rapidly becoming the smaller part.


Thank god.  I'm going to crack open a beer at lunch and take the rest of the day off then.


Screw it, I'll have one for breakfast too.


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