Old rivalries die hard.
Irvine-based Broadcom Corp. and Newport Beach-based Conexant Systems Inc. have charted different courses in recent months. But the prospect of an emerging market,the routing of phone calls over the Internet,is rekindling competition between the Orange County chipmakers.
Even Conexant offshoot Mindspeed Technologies Inc. of Newport Beach is looking to get in on the action. All three companies have unveiled chips used in sending voice calls over the Internet, known in industry parlance as voice over Internet protocol.
So far, VoIP has been more promise than practicality. It’s billed as a more efficient way to call, in many cases without the tolls and fees of regular phone service.
But this year, industry experts are predicting a big move in VoIP, sparking a major land grab among technology companies.
Witness last month’s salvos.
Conexant unveiled what it called its “second generation” of VoIP chips late last month. A few days later, Broadcom released a chip that allows voice data to be transferred at a gigabyte per second.
The moves come on top of a wholesale restructuring by Mindspeed late last year in which the chipmaker laid off about 80 people in its network processor division and refocused on VoIP.
So what’s the big deal?
The market for VoIP chips is projected to grow by 48% annually, reaching $1.7 billion by 2008, according to market researcher International Data Corp.
Market trackers expect the overall market for VoIP,from cable services to software to chips,to go from $517 million in 2004 to $9.5 billion by 2008.
“I think that 2005 is the year when consumers will start to see these things,” said Greg Fischer, vice president of broadband carrier access at Broadcom.
In some ways, they already have.
The number of cable VoIP subscribers grew by 900% from 2003 to 2004, according to San Jose-based Infonetics Research. Subscribers rose from less than 50,000 in 2003 to nearly 500,000 last year, the market researcher said.
Cable companies doubled their investment in VoIP last year to $123 million, according to Infonetics.
A key growth driver is seen as the integration of VoIP with new “dual-mode” phones that can tap the Internet and wireless networks, according to research firm In-Stat.
The phones could go mainstream in 2006, creating demand for local chipmakers.
Last September, Broadcom unveiled a set of chips for VoIP in wireless phones. The chipset allows you to add a phone to a wireless home network and tap a computer’s Internet access to make calls.
Broadcom showed off the chipset in early January at the International Consumer Electronics show in Las Vegas.
“I would say that our products are much broader than Conexant’s,” Broadcom’s Fischer said. “In their announcement, they said ‘We have a chip.’ Broadcom has a family of chips that allows us to integrate.”
Conexant has a slightly different tack. The company is making VoIP chips that sit in home-based gear, such as regular phones and home appliances.
Conexant once had a much larger set of voice products. It had wireless VoIP chips in its wireless division, which now is part of Skyworks Solutions Inc. It also had VoIP chips for Internet servers in its Internet infrastructure business, which now is Mindspeed.
“We had a bunch of processing before spinning off Mindspeed and Skyworks,” said Zeev Collin, vice president of voice access products for Conexant.
Conexant has a lot riding on VoIP, especially after the company’s big bet on the wireless networking market tanked last year after Taiwanese chipmakers undercut it on prices.
As for Mindspeed, it is hoping to take market share in VoIP chips that sit inside Internet servers.
“If you look at our heritage, that’s where it is,” said Tom Stites, a Mindspeed spokesman.
