Silicon Image Expects Revenue from MHL 3.0 and HDMI 2.0 in 2014

The MHL 3.0 standard will likely be set by mid-year, with HDMI 2.0 to follow in the second half, said Martino, whose company markets chips based on both technologies. HDMI 2.0 originally had been expected by CES (CED March 8 p1). Finalizing the two standards could produce a slight “uptick” in the combined average selling price (ASP) for Silicon Image’s chips at the start of shipments, Martino said. Silicon Image’s combined ASP in Q1 was 88 cents, down from 92 cents the previous quarter, Chief Financial Office Noland Granberry said. “Obviously over time as the volumes increase and cost structure comes down, you would expect ASPs” for the new HDMI and MHL chips to “trend down as well,” Martino said.

The first HDMI 2.0 chips are expected to reach volume production in 2014, with many of the updates from HDMI 1.4 involving 60 Hz frame rates for 4K video, Silicon Image officials have said (CED March 8 p1). Silicon Image’s licensing business typically accounts for 10-15 percent of annual revenue. But within 3-5 years of the new standards being adopted, Silicon Image’s licensing revenue could shrink to 10-15 percent of annual sales as product revenue grows at a faster pace” than licensing, Granberry said. MHL chip shipments could outstrip those of HDMI within “a couple years,” the company has said. MHL will be licensed to existing processor suppliers with the technology expected integrated into a design by early 2015, company officials said.

MHL chips have been Silicon Image’s strongest seller, generating 66.8 percent of the company’s Q1 revenue of $62 million. Samsung has been Silicon Image’s largest customer, at about 35 percent of quarterly revenue, having added MHL 2.0 to the new Galaxy S4 smartphone and Galaxy Note 8 tablet. But HTC’s One, Huawei’s Ascend, Sony’s Xperia Z and ZTE’s Grand Memo smartphones have also adopted the technology, Silicon Image has said. Silicon Image has also started getting revenue from a reference design combining MediaTek’s quad-core MT6859 processor with an MHL transmitter using Silicon Image’s Media Data Tunneling (MDT) technology. Silicon Image’s revenue from the MediaTek reference design will “materially expand” in 2014, Martino said.

Silicon Image’s WirelessHD business will reach breakeven “sometime next year” at the earliest, Granberry said. The new UltraGig 6400 WirelessHD chip has been sampling since January, combining a 60 GHz transceiver, baseband processor and embedded antenna array on a single IC. Silicon Image, which added WirelessHD when it bought Sibeam in 2011, hasn’t identified potential customers, but is talking to many of those that already use MHL and HDMI, the company has said. WirelessHD uses orthogonal frequency division multiplexing with adaptive beam-forming to deliver data and in the past has been built into TVs and adapters, generating $2-$3 million in annual revenue.

Silicon Image will land some deployment agreements for UltraGig 6400 this year, but the “real revenue ramp” will be in 2014, Granberry said. With Chinese mobile devices suppliers Huawei, Lenovo and ZTE already using MHL, there also is “strong potential” for UltraGig with those companies, Martino said. The added cost of integrating a module containing an UltraGig chip into a design is less than $10, Martino has said (CED Feb 7 p1). Silicon Image had been spending about $4 million a quarter on developing the technology, Granberry said.

Silicon Image’s Q1 net loss narrowed to $561,000 from $9.5 million a year earlier as its CE business “stabilized” after several quarters of sharp revenue declines, the company said. The company’s Q1 sales improved to $62 million from $55 million a year earlier as product revenue grew to $50.3 million from $43 million, the company said. Licensing revenue slipped to $11.6 million from $11.9 million, the company said. Silicon Image expanded operations in Shenzhen and Shanghai, China where design centers have 160 employees.