What changes have you seen in the customer demands related to chip features over the last couple of years and what is CEVA doing to address those demands?
With the triple play and quadruple play, there will be demand to significantly reduce the cost of these offerings, and the only way to accomplish this (in the context of chips) is to start integrating everything into a single chip solution. And the licensing model is the only way to achieve such advanced technology in a cost-effective manner.
Companies like TI, Freescale, ST and Broadcom cannot specialize in every one of these areas. They may be experts in the modem function of the fiber or in the modem function of DSL or WiMAX. But to have the in-house expertise in every technology required for triple or quadruple play products is very difficult. It is much easier for them to license a full solution for a block of the technology such as VoIP and integrate it into the chip. This is where CEVA comes into the picture.
Do you see all semiconductor devices (DSPs, ASICs, ASSPs etc.) maintaining a significant role in technology, or will some of these devices eventually become obsolete for the communications industry?
We definitely see a significant reduction in ASIC design because it is very expensive to design these advanced processors. There are not a lot of applications where a company can justify spending $1million to $1.5 million to develop an ASIC. This is a general trend in the industry — not just the communications industry. Standard DSPs are not a good choice in this market either, because the cost structure will not allow providing something generic for what we consider a discrete solution. It’s done by multiple chips, and that’s too expensive. The cost-effective approach is with ASSPs. In fact, the big names like TI, Freescale, ST, Broadcom, etc., are all involved with ASSPs. In this communications market, if you don’t have the capability for ASSP, you are out.
Cellular handsets obviously brought in a boom for the communications chip market. Do you see any other such devices or technology bringing in a second wave of high volume business?
Yes, I believe that mobile multimedia will eventually grow, in terms of revenue, faster than cellular. The volume and revenues of the cellular handset and mobile device markets are going to grow significantly because of developing countries like India and China. Applications include MP3, MP4 and portable multimedia players, mobileTV and the emergence of HD for mobile devices.
The semiconductor industry is witnessing consolidation just as other allied sectors. What is unique though about the chip industry that drives market consolidation?
The amount of investment to bring a chip to market is enormous. There’s little choice, eventually the industry will need to consolidate, as it has been doing, to survive.
China and India are attracting many chip vendors, Do you see these two countries having an important role to play, with China focusing on the manufacturing and India focusing on software development?
I believe that China and India have a key role in our industry, but not the traditional way in which we think about China for manufacturing and India for software. We are working today with many fabless companies in China doing design for the local market. China will become a vertically integrated market – there will be fabless companies, startup companies and software companies. In India, I think we’ll see a similar trend although it is ramping a bit slower than China. The difference between China and India is that the Chinese are risk takers in terms of finances, etc., while India is a bit more cautious. But things are changing and Indians are getting more confident all the time.
VoIP has historically been one of our main interest areas. Can you let me know what you have been doing in that segment?
In case of our VoIP solution, we license to those chip companies in the broadband arena designing products such as IP set top boxes, passive optical networks, etc. They handle the communications and modem functions of the chip and CEVA provides them with the VoIP technology in what is essentially a “black box” consisting of a DSP, related peripherals and VoIP software.
Is your VoIP Intellectual Property (IP) specific for a particular type of DSP?
Our CEVA-VoP platform solution is built around one of our own DSPs; the CEVA-TeakLite-II. This is one of the strengths of CEVA - customers can license our DSP, peripherals and software all together, optimized and ready for integration into their SoC design. We are essentially a one-stop-shop for VoIP for integration into broadband modems and broadband customer premise equipment, etc.
What sort of growth are you expecting going forward?
CEVA is focused on the DSP market where CAGR for next five years is growing at about 9% percent. You have to look at the specific segment within the DSP market. For instance, we are in mobile market and CAGR for this segment is around 15%.