Integrated phone chips on the rise, despite Intel woes

Exploding demand for cheap but powerful mobile phones has led to new integrated designs emerging from chip makers for the mobile phone industry, despite the troubles that the world's largest semiconductor vendor has had with an integrated design.

Freescale Semiconductor unveiled its integrated MXC architecture Tuesday and announced that its former corporate parent Motorola is working with samples of Freescale's first integrated design, which combines an applications processor and an EDGE (Enhanced Data Rates for GSM Evolution) modem. Last week, Texas Instruments (TI) said that Nokia would adopt a forthcoming processor design that integrates several other chips needed to make a mobile phone work, in addition to the applications processor and modem.

However, the ongoing trend toward integrated mobile phone chips has left Intel behind. The company's first attempt at the mobile phone market, an integrated chip code-named Manitoba, received a great deal of attention but was never actually used in a single mobile phone on the mass market. Hermon, the next generation of that architecture, is supposed to appear in phones over the next few years but Intel has not said much about the processor since unveiling it at the 3GSM World Congress show in France last year.

Mobile phones are one of the fastest growing segments of the hardware industry. Shipments of phones grew about 23 percent to 703 million units in 2004 compared with the previous year, according to data from iSuppli. Nokia and Motorola ranked first and second in mobile phone shipments, respectively, during the fourth quarter. Samsung Electronics was in third place during the fourth quarter of 2004, iSuppli said.

"The demand for cell phones is insatiable. Cell phones have become fashion statements, gaming platforms and everybody's got to have the latest bells and whistles," said Will Strauss, principal analyst with Forward Concepts.

Chip makers have satisfied demand for the high end of the mobile phone market with two-chip packages that are usually more powerful than integrated chips. However, integrated chips are significantly cheaper to build into mobile phones because they take up less space on a motherboard and reduce the complexity of the design, Strauss said.

Improvements in manufacturing technology also mean that the latest batch of integrated chips can bring increased performance to the low-end and midrange mobile phone markets, allowing users to buy more powerful phones for the same price they paid for older technology, Strauss said.

Freescale believes its integrated MXC chip is competitive with discrete chips from Intel and TI, said Jose Corleto, cellular operations worldwide system architecture manager for Freescale.

One of the arguments in favor of a discrete chip layout is the separate memory subsystems that can be dedicated to each chip, but Freescale thinks it has gotten around that problem by using cache memory directly on the integrated chip. This reduces the time needed to access frequently used data, improving performance to where an integrated chip can be competitive with a basic stand-alone applications processor, Corleto said.

As the mobile phone industry evolves, more and more chip makers will emphasize integrated chips for their customers, Strauss said.

"People want cell phones, and they want increasing functionality, but they don't want to pay any more than they already do," Strauss said. "The only thing manufacturers can do is to make them cheaper, and the main way of doing that is through integrated silicon."

This would seem like good news for Intel, which has not been able to get its mobile phone project off the ground. The company's Hermon processor will support UMTS/WCDMA (Universal Mobile Telecommunications Services/Wideband Code Division Multiple Access) networks, or so-called 3G networks. While the data speeds provided by 3G (third-generation) networks are not widely used in the U.S. and emerging markets, the mobile phone industry will eventually migrate to that standard.

Intel's XScale applications processor has been well received by many mobile phone companies for high-end designs that use discrete layouts. But the market has been hesitant to bet on Intel's communications technology, and with two of the world's top three mobile phone vendors committing to other silicon vendors, Intel's potential partners narrow considerably.

The company still believes it can generate excitement for Hermon in 2005 and 2006, said Mark Miller, an Intel spokesman. The ongoing trend toward integrated chips for mobile phones validates Intel's decision to move into that market, he said, even if it has yet to realize a return on its investment.

All three chip companies are expected to talk further about their plans for integrated designs and the road to 3G networks at the upcoming 3GSM show in Cannes starting Feb. 14.

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