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Synad's Chipset Chitchat

An upcoming third round of venture capital funding for wireless LAN chipset startup Synad Technologies Ltd. has set industry tongues wagging over the U.K. company's long-term prospects.

Following a big cash injection last year (see Synad Gets $20.7M), the vendor has revealed it is seeking additional funding as it attempts to tackle larger and more established rivals in the multimode chipset space.

“We are in the process of raising further funds,” Kevin Mapplebeck, VP of marketing and business development, tells Unstrung. “It is going to happen very soon.”

The need for such extra funding, coupled with fears that the company is lagging competitors in terms of volume shipments, has fueled concern that Synad may have missed its window of opportunity.

In April the vendor unveiled its Mercury5G chipset, capable of supporting all three Institute of Electrical and Electronics Engineers Inc. (IEEE) 802.11 standards -- 802.11a (54-Mbit/s over 5GHz), 802.11b (11-Mbit/s over 2.4GHz), and 802.11g (54-Mbit/s over 2.4GHz) (see Synad's Three-Way Play ). According to Mapplebeck, the chipset is now shipping and customers are expected to be announced “in the autumn timeframe.”

This timescale leaves the vendor trailing rivals such as Atheros Communications Inc., Broadcom Corp. (Nasdaq: BRCM), and GlobespanVirata Inc. (Nasdaq: GSPN).

“A while back my thought was that they would be one of the first companies to actually get combo a+b, and a+g products out,” writes Allen Nogee, principal analyst at In-Stat/MDR. “Things seemed to be moving along, and then, like many companies, it seemed to take a bit longer than expected. Synad has their chips out but the problem is, so do many other companies. With companies like Atheros and Broadcom squeezing in for what little business there is now, it will be tight.”

Such obstacles raise the question of whether the company is preparing itself for acquisition by a larger rival looking to bolster its own wireless LAN offering. “The most obvious acquirers are STMicroelectronics NV (NYSE: STM) and Motorola Inc. (NYSE: MOT),” proffers Bob Wheeler, senior analyst at The Linley Group. “In particular, Motorola has side-stepped 802.11 but might wake up one day and decide to get involved at a relatively cheap price.”

Synergy Research Group Inc.'s industry analyst Aaron Vance has a similar view. “If they are going to be a target for acquisition, it would be from a company that doesn’t have in-house wireless LAN capabilities.”

The company itself isn’t ruling out this possibility. “We remain with an open mind about how we can build value for our shareholders,” says Mapplebeck. “We are focusing on building a good business. Therein lies success.”

Unstrung Insider's recent report -- Wireless LAN Chipsets -- notes the challenging market conditions Synad and rival startups can expect to encounter as the industry matures.

“Over the next one or two years, Unstrung Insider expects many more acquisitions in this sector, particularly of companies with a good 5GHz or multimode story, or other distinguishing features,” writes author Gabriel Brown. “For the startups, this adds up to very, very tough market conditions.”

— Justin Springham, Senior Editor, Europe, Unstrung

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