Broadcom entered the GPS market in June 2007 with its acquisition of a small GPS company called Global Locate. Broadcom has a clear strategy: it only enters markets where it expects to become the top vendor. With a recent major GPS design win, the company is poised to do just that. At the same time, Broadcom has dealt a severe blow to rival Infineon.
A Tale Of Two GPS Vendors
Six years ago, Global Locate was one of several small companies working on GPS technology. Personal navigation devices (PNDs) were bulky and expensive, and very few phones had a GPS chip. SiRF dominated GPS shipments to the tune of several million chips per year.
In 2004, Global Locate licensed its fledgling GPS baseband technology to Infineon. The chip company used its analog and RF expertise to build the first complete GPS subsystem on a chip, a product it called Hammerhead. Hammerhead (and its successor, Hammerhead II) became massively successful, as Infineon shipped more than 80 million units from 2005 to 2010.
Although Global Locate received only a small licensing fee from each chip sold, Hammerhead’s success caught Broadcom’s attention when the company sought a way to enter the growing GPS chip market. After considering a licensing deal, Broadcom liked the technology so much it bought the company. By the end of 2007, it was selling its own GPS chip, the BCM4750, using the Global Locate technology.
Broadcom initially struggled to sell the BCM4750, as most customers preferred Infineon’s version. Although Broadcom used the same GPS baseband design, the RF portion of the chip is essential in achieving sensitivity. Thus, when Apple added GPS in the iPhone 3G, Infineon was the logical supplier, as its chip had been proven in the market for two years.
Having missed out on the iPhone 3G, Broadcom wooed TomTom, a leading PND vendor. Once TomTom sold millions of its GO products using the BCM4750, Broadcom was able to convince other vendors that its chip was just as good as the Hammerhead II, leading to additional design wins.
iPhone 4: The Turning Point
At the same time, Infineon was working on a new GPS chip. Because Broadcom was no longer willing to license the Global Locate technology for any new products, Infineon was forced to find another GPS baseband, inking a deal with Seiko Epson, which has sold GPS chips to Japanese phone makers for years.
When Apple sought to improve the GPS chip for the iPhone 4, it again considered Broadcom and the incumbent Infineon. Broadcom brought the now proven BCM4750, which offers the same –162-dBm tracking sensitivity as the 130-nm Hammerhead II, but its 90-nm technology reduces size and power consumption.
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Infineon countered with its new Xposys GPS chip, which is rated at an industry-leading sensitivity of –165 dBm. Built in 65 nm, Xposys offers a smaller solution size than the BCM4750 and even lower power consumption: just 11 mW when tracking at one sample per second. Apple, however, was concerned that Xposys had not been deployed in the field. Once again, it chose the proven solution, this time from Broadcom. Apple also chose Broadcom for the GPS chip in the iPad.
Apple’s choices drive tremendous volume. We forecast that Apple will build about 35 million iPhone 4s this year (including some that will ship in 2011) and 5 million cellular iPads. (The non-cellular version does not have GPS.)
We also estimate Broadcom’s share of the GPS chip market will jump from just 6% in 2009 to 24% this year and 35% in 2011, making it the leading vendor of GPS chips at that time (see the figure). Broadcom could gain further share if Apple adds GPS to the new iPod Touch in September.
With the loss of its biggest (by far) customer, Infineon will see its GPS market share drop from 17% in 2009 to an estimated 2% in 2011, assuming it does not add any big new customers before then. With many handset makers shifting to integrated devices that combine GPS with Bluetooth and other functions, such large design wins are quickly disappearing.
Broadcom Does It Again
Broadcom’s track record with new technologies is simply amazing. The company entered the Ethernet market in 1999, introduced the industry’s first Gigabit Ethernet chip in 2000, and quickly became the number-one supplier of Ethernet chips. Broadcom deployed the industry’s first 802.11g chip in 2002 and went on to become the leading Wi-Fi chip supplier. More recently, the company became the leading supplier of DSL chips in 2008 and the leading supplier of switch-fabric chips in 2009. It is also the leader in mobile Wi-Fi and in Bluetooth combo chips.
Broadcom succeeds by introducing leading-edge technology at a steady pace. It also focuses on top customers, such as TomTom in PNDs and Apple in smart phones, working relentlessly to win their business. This recipe for success seems simple, but if it were, other companies would be following in Broadcom’s footsteps.
LINLEY GWENNAP is the founder and principal analyst of the Linley Group and coauthor of A Guide to Mobile Connectivity Chips and A Guide to Mobile Processors.