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AMD, Intel, Nvidia named as ST-Ericsson suitors

AMD, Intel, Nvidia named as ST-Ericsson suitors

ST-Ericsson is rumoured to be looking for a buyer, but could its ARM product range survive an acquisition by Intel?

Semiconductor giant ST-Ericsson, a joint venture between mobile specialist Ericsson and STMicroelectronics, is ripe for a takeover - and fingers are pointing at AMD, Intel and Nvidia as the most likely candidates.

ST-Ericsson was formed as a joint venture between the two companies back in 2009, and while fabless its communications chipsets have found their way into a huge number of devices throughout the world.

Recently, however, the company has been shifting its target market: while it still makes the majority of its profits from communications hardware, ST-Ericsson has been using an ARM licence to produce a system-on-chip design known as NovaThor. Combining communications hardware, high-performance Mali 400 graphics processing, and single- or dual-core Cortex-A9 central processing units, NovaThor is proving popular with handset makers as an alternative to similar highly-integrated chips from the likes of Qualcomm.

ST-Ericsson itself, however, is undergoing a period of restructuring. While the company is quiet on the exact reasons, the Reuters news agency claims that sources are pointing to an impending acquisition that will see the joint venture snapped up by one of the bigger players in the industry.

Officially, nobody's talking. Unofficially, the unnamed sources point to AMD, Nvidia, Intel and Texas Instruments as potential buyers for ST-Ericsson.

Nvidia and Texas Instruments are both obvious choices. Both are in competition with ST-Ericsson for the mobile market, Nvidia with its Tegra family and TI with its OMAP family, and could benefit from the increased integration that ST-Ericsson has to offer from its wireless business. Heavy integration - where communications, processing, and peripheral functionality are all combined onto a single chip to save space and power - is a key offering of Qualcomm, and an ST-Ericsson buy would help either company break into new markets.

AMD is another name that shouldn't surprise. AMD's Sasa Marinkovic told us back in May last year that it couldn't rule out the possibility of making ARM processors, while more recently AMD's chief technology officer Mark Papermaster dropped some heavy hints about an AMD-ARM deal which would see the company adding low-power Cortex-based products to its accelerated processing unit (APU) line-up.

Intel, however, is a wild-card entry. It's true the company has previous form: following a lawsuit between Intel and Digital, the chip giant acquired an ARM licence which it used to produce StrongARM chips and the later XScale family. Intel left the ARM game back in 2006, however, selling its licence to Marvell and concentrating on x86 and Intel Architecture chips.

More recently, the company has been aggressively targeting ARM with low-power Atom options. In January's Consumer Electronics Show, the company unveiled the Atom Z2460 system-on-chip design which offers a serious x86 alternative to smartphone makers bored of the ARM architecture.

If Intel were to purchase ST-Ericsson, it seems unlikely it would be doing so for its ARM know-how. Rather, such an acquisition would likely see the ARM product lines terminated in favour of highly-integrated system-on-chip designs combining ST-Ericsson's wireless communications products with Intel's Atom processing family.

So far, none of the companies named by Reuters' sources have come forward to confirm or deny the rumour. Should ST-Ericsson get picked up by one of the named parties, however, expect the low-power SoC market to get a serious shake-up.

5 Comments

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Adnoctum 15th March 2012, 17:27 Quote
Surely Intel would only be interested in the mobile-related IP that would come with the purchase?
With their own intent to put Atom/X86 into phones nearing fruition, and having previously been an ARM maker before discarding the capability, why would they buy in again?
I agree that it is possible that they may be trying a mobile-variant of the Centrino/Ultrabook strategy, where Intel present a complete platform to OEMs so they can "individual-ise" them.
Intel in the past has shown little interest in being an ODM, so I couldn't see them doing a Google and releasing either an Intel branded phone or selling a complete handset and having a customer slap their brand on it (such as a carrier, etc).

AMD just snapped up SeaMicro, and although they might have the cash, would they want to spend more so quickly? Also, AMD is a long way from a mobile-phone capable X86 (if they are even pursuing such a project, and I would think not as their hands have been full lately producing three X86 lines) or mobile-capable graphics to integrate AMD graphics into a SoC.
ARM licences aren't difficult to come by and AMD has a lot of experience developing CPUs and SoC designs (they even have a history with STMicro before AMD sold their mobile stuff to Qualcomm in 2009). Other than the IP gained, it might be better and cheaper for AMD to develop their own program.
EDIT: I forgot to mention AMD's Hondo APU. This Bobcat-based APU is intended for tablets as it consumes 4.5W, FAR too much for mobile phone use.

Nvidia is perhaps most possible, they have the cash to spend and would like to be able to offer a platform to customers and hasn't shrunk from offering their products in retail in the past (in competition with their customers). They haven't had huge success offering Tegra to the OEMs, so they may believe that by offering a complete platform it may encourage take up of Tegra. But they have both an existing ARM licence and an experienced development team designing SoCs for mobiles. Once again, they wouldn't gain too much over what they are already capable of.

Intel: If they want the IP or want to get back into ARM.
AMD: If they want to get quickly into the mobile space.
Nvidia: If they want to be a complete OEM and offer a full platform, or even be a full ODM.
alex101 16th March 2012, 00:58 Quote
I don't recon it's be AMD. They don't have the cash, especially after their SeaMicro purchase.
Their current debt is $2 billion :/ (although, halved in the last year or so).
rollo 16th March 2012, 01:12 Quote
AMD are too much in debt to buy the companie enough a share deal is possible

Intel or nvidia most likely dout either would continue arm processors though as they would want to use there own tegra 3 or x86/atom.
doubleposter 16th March 2012, 05:38 Quote
Intel already owns Infineon's former mobile division, so besides buying up a competitor I don't see Intel buying ST-E.

I remember reading somewhere that ST-E had a contract with Global foundries to make their 28 nm SoCs, but unless Abu dhabi pumps more money into AMD I don't think they can buy ST-E.

As long I'm starting a new rumor, I think that LG would be better suited to buy ST-E (to compete with Samsung's SoCs and what not)
Adnoctum 16th March 2012, 10:58 Quote
You have to be careful when expressing opinions about financial matters.
Having debt does not equal broke. Just like having a mortgage on your house doesn't equal broke.

AMDs financial statement (updated 2 weeks ago) shows they have long term debts of $2b (this doesn't include other operating liabilities such as taxes, insurance, leases or other bills).
It also shows that they have Cash & Equivalents (meaning cash or investments that mature in <3 months) of $870m and a further $900m in Short Term Investments (meaning investments that mature in <12 months). Such investments can be bonds, stocks, or other securities or even term deposits and can be converted into money before maturity.
So AMD has cash and short-term investments worth $1.75b.

If it was me (as an individual and not a corporation) I would use those investments to pay down the debt, but it is possible that in the current economic conditions and with tax breaks that servicing that debt costs less than AMD makes in return by investing.
But it also allows them to make opportune purchases (such as SeaMicro) or cover debt servicing in case of problems beyond their control (meteorite strike, zombie apocalypse, etc).

So with AMD purchasing SeaMicro for $330m a few weeks ago, AMD may still be able to make another purchase soon.
Also it is worth noting that it isn't STMicro or Ericsson that the speculation is about, but rather their joint venture ST-Ericsson. Problem is I haven't seen any rough figures for what ST-Ericsson would be sold for. The venture has been making some big losses over the last few years ($2b in 3 years) so it may be quite affordable, though it might come with extra debt (currently $800m with Ericsson and STMicro).
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