TI Shifting OMAP Processors More Toward Industrial Applications

While TI labored for years to establish a base for OMAP processors in cellphones and more recently, tablets, those products have become “less attractive” as Apple and Samsung increasingly rely on their own chips and competition sharpens with Nvidia’s Tegra and Qualcomm’s Snapdragon ICs, TI executives said. “If you look at the dynamics in that market, you look at it being dominated by a couple of players, you look at the fact that vertical integration has become a very significant factor in that marketplace, the truth is, it is a less attractive opportunity for us,” Delagi said.

TI’s OMAP chip had an array of design wins in 2011 with Amazon’s first-generation Kindle Fire, B&N’s Nook and Samsung’s Galaxy S II smartphone. But as sales of those products slowed in the first half of this year there was not a “meaningful pick up” in sales at the start of the second half, FBR Capital Markets analyst Craig Berger said. TI has started to enjoy “slightly stronger” OMAP sales due to OMAP processors being built into Amazon’s new Kindles, he said.

The slowdown in OMAP sales earlier this year was partly tied to customers delaying purchases pending the arrival of the 2 GHz dual-core OMAP-5 that was produced using a 28-nanometer process. But with the arrival of Qualcomm’s Snapdragon S4 and Nvidia’s Tegra-3, OMAP “lost some of its differentiated value proposition,” Berger said. “Weak OMAP sales also may have been magnified by decisions from Samsung and Apple to use proprietary applications processors,” Berger said. TI previously had “numerous” designs with both companies, he said.

TI’s shifting of OMAP ICs from tablets and smartphones to embedded industrial and automotive applications will likely take 12 to 18 months, Delagi said. With the change, TI will likely see a decline in OMAP’s $1 billion in annual tablet- and smartphone-related revenue, TI executives said. TI has about 20 OMAP products spread across 150 customers that sell for $10 to $30, Delagi said. The first of the OMAP-5-based products are expected to hit the market in early 2013. The OMP5432 and OMP5430 started sampling earlier this year. The OMAP 5 shifts to a Power VR SGX544MP2 532 MHZ dual-core graphics processor with a 2D graphics accelerator from the 384 MHZ graphics IC in the OMAP4470. The OMAP5430 and OMAP5432 also contain 32-bit dual-core 532 MHZ DDR2 and DDR3 memory. Earlier this year, TI described the change in OMAP as a broadening of its market rather than a shift in focus (CED June 27 p3).

"They are going from a market where they have a few customers,” said Vivek Arya, an analyst at Bank of America Merrill Lynch. “But those customers are very large opportunities that can ramp up fairly quickly” to a market with many customers and longer “cycle times in terms of how the product is designed in,” Arya said.

TI’s OMAP processors frequently were built into the same products that included the company’s analog chips that handled power management and other features. But the shift of some OMAP business away from tablets and smartphones isn’t likely to reduce TI’s analog chip business with the products, Delagi said. “The nice thing about analog is that you can sell something to just about every customer,” Delagi said. “And you go into those products that are non-OMAP-based."

While TI already sells Sitara Arm-based 375 MHz to 1.5 GHz processors into the embedded market, it will be able to “leverage” OMAP technology, Delagi said. With the addition of OMAP to its embedded processor line, TI will move Sitara ICs “up to an even higher end,” Delagi said. The OMAP processors will strengthen TI’s push to get design wins in automotive infotainment systems that are rapidly adding Bluetooth, GPS and Wi-Fi. TI landed an agreement with Harman International earlier this year to build OMAP processors into infotainment systems and pact with iRobotics for robotics products.

TI has about 30,000 customers in its embedded business, which also includes digital signal processors and low-power mixed signal microcontrollers, company executives said. TI’s microcontroller segment has 1,300 products that sell for 25 cents to $25 and are designed to reduce power consumption and extend battery life, company executives said. Among these is the MSP430 16-bit processor that is aimed at handheld military devices, avionics and metering and is designed to handle some tasks independent of a CPU. Wi-Fi also is being added to microcontrollers, TI executives said. The company also “sees momentum” around ZigBee mesh networking technology, “specifically in 2014” in the form of lighting, metering and remote control for the industrial market, Haviv Ilan, vice president and general manager of wireless connectivity solutions. ZigBee is currently being used for electronic shelf labeling in retailing.