It's WLAN Seduction Season
Watching the wireless LAN (WLAN) chipset market at the moment is a bit like being a fly on the wall at your local disco on a hot and humid Friday night. You may not know yet which well-heeled silicon lothario will sweet-talk an inexperienced ingénue back to his place with promises of "higher volumes" and "better market penetration" -- though you can be pretty damned sure it's going to happen at some point during the evening. But if you're the one being charmed... just hope he doesn't pick your wallet.
"There's destined to be some kind of a shakeout in the market over the next year or so," says Ken Furer, an analyst at IDC. There are too many players in this still emerging market, he says, and many of the startups won't be able to survive on their own.
Fortunately, however, many of the startups have some something that the older, more established players want. Companies like Atheros Communications have led the pack in developing chipsets that support more than one type of 802.11 WLAN standard. Established players, many of which were late to recognize the potential of WLAN, need to get up to speed with the technology -- and what better way than through an acquisition?
This is the route that Broadcom Corp. (Nasdaq: BRCM) has already taken. The company acquired multimode designer Mobilink back in April and is now on track to be one of the first to deliver an 802.11a/b chipset (see Will Broadcom's Mobilink Deal Spur More M&A?).
Furer does not think this is the last acquisition we will see in this space. He names Atheros, Synad Technologies Ltd., and Resonext Communications Inc. as prime targets for companies looking for some fresh young meat to perk up their WLAN product portfolios.
"Even Intersil Corp. [Nasdaq: ISIL] could potentially be acquired," Furer claims.
But who will buy the startups?
Infineon Technologies AG (NYSE/Frankfurt: IFX) is one of the more surprising names that Furer pulls out of his hat.
"They recently announced this wireless networking business unit," he notes. Yet, they have no working silicon. "It’s a little late to be working on developing chipsets."
An Infineon spokesperson refused to comment.
Intel Corp. (Nasdaq: INTC) has said it will have a dualmode a/b chipset on the market by the end of the year (see Intel Plots Home-Grown 802.11 and SpectraSwitch Takes a Holiday). However, Furer reckons that if the chipmaker can't make its home-grown silicon work on time, it may still be tempted to buy in what it needs.
Likewise, RF Micro Devices Inc. (Nasdaq: RFMD), which currently occupies a niche in the low-cost 802.11b market but may look to grow as the market does.
Whatever happens, you can expect to see established players put a few more notches on their fab plants before very much longer.
— Dan Jones, Senior Editor, Unstrung