semiaccurate Texas Instruments selling OMAP division

Frankly, I'm waiting for anything Charlie reports in the mobile SoC arena to come true :/
 
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Why would you sell a division that is doing so well in a market that is growing so fast?

If anything, I think Apple would be a better fit. They have lots of cash, and they wouldn't mind getting hold of a team that has so much experience in this domain.
 
Selling a cutting-edge division that's operating in an expanding slash exploding market seems like a stupid move to me. But hey, I'm sure it'll give some CEO a hundred million dollar bonus, so it must be the right thing to do... :rolleyes:

(Disclaimer: assuming this rumor is even true in the first place, of course.)
 
Yeah, Charlie's sources are horribly bad in the handheld market.

But unlike some of you, I can see the appeal of trying to sell the OMAP division. TI is trying to focus on their analog business. And yes, smartphones are a very high growth business, but I always liked Bob Swanson's memorable quote when Linear Tech divested its handheld division: "We recognized there was no pot of gold at the end of the cellphone rainbow, just red ink."

The wireless division at TI had revenue of $658M in Q1 and $558M in Q2. That decline is mostly a reduction in the legacy baseband business (i.e. Nokia) and a bit of seasonality, but the fact remains that eventually the entire legacy baseband revenue will be gone. That's $228M in Q2, which brings us down to only $330M revenue - and the $82M operating profit would become slightly negative. Excluding legacy business, TI is already losing money in the wireless space (or at least not noticeably above break-even). They'll need that strong smartphone growth just to get back to where they are today.

I'm sure OMAP and the associated connectivity division can be a good and profitable business despite the strong competition and TI's lack of a 3G/4G baseband, but I'm not convinced it can be so profitable that it wouldn't be more attractive to sell it to the right buyer at the right time. That buyer nearly certainly isn't Apple or NVIDIA, but I can see very good justifications for Samsung, AMD, ATIC, and even Intel. However there's also the complication that the embedded division reuses OMAP tech and even OMAP chips and I'm not sure how that would be handled (would TI be willing to sell the whole thing? I'm skeptical).

Then again this probably won't happen, both because it's not very likely in itself, and because Charlie said it will - which is a pretty reliable sign that nobody's actually considering it at this point :p
 
Arun said:
That buyer nearly certainly isn't Apple or NVIDIA, but I can see very good justifications for Samsung, AMD, ATIC, and even Intel.
Click to expand...
In that case, you'll have to give some justification.

Is it because samsung's SoC division looks a bit weak compared to the rest?

Is is because AMD's board is desperate to get into this business?

Is it because ATIC has more money than they know how to spend wisely?

Intel will buy it over x86's dead body. An x86MAP will have additional go-to-market latency due to integration issues and is unlikely to be much better that what they already have.
 
rpg.314 said:
Is it because samsung's SoC division looks a bit weak compared to the rest?
Click to expand...
Pretty much. And no matter how good their tech might be, they've clearly failed completely at gaining any Tier 1 design wins beyond Samsung. Whether this is worth the price for them depends on two things: 1) Do they get the Connectivity and ideally even the Embedded Processing businesses to go with OMAP? They'd clearly like that. 2) Is Apple going to keep manufacturing their SoCs at Samsung long-term? If not and they're serious about the logic business, this is a very good opportunity. Otherwise, they might not have the capacity anyway.
Is is because AMD's board is desperate to get into this business?
Click to expand...
Yeah, I'd expect them to be willing to pay quite a bit for something with OMAP's cachet, whether that's rational or not for them. Unlike the others, I can't see them being very interested in the connectivity or embedded divisions.
Is it because ATIC has more money than they know how to spend wisely?
Click to expand...
Yes, and TI seems quite UMC-centric right now, so it's a good way to redirect more sales to GF. Arguably not worth the price, but there are worse investments out there... These are the same people who invested in AMD at a really bad time, so they're certainly willing to take risks.
Intel will buy it over x86's dead body. An x86MAP will have additional go-to-market latency due to integration issues and is unlikely to be much better that what they already have.
Click to expand...
If they stick to x86, then it's a very expensive way to gain both credibility and engineers - in a way that's not very different from the Infineon acquisition. I agree it's not worth it but Intel isn't known for its rational acquisition strategy. And if they want to switch to ARM, then this is pretty much their only chance to do so credibly - but of course, that's not absurd with the next-gen microarchitecture coming soon on 22nm. They'll do their best to push that before trying anything more drastic.

Anyway, as I said this isn't very likely - and there clearly isn't an ideal buyer. But it's not impossible that they're considering it. Then again it's not because there are negotiations that there will necessarily be a deal.
 
I've mentioned this on the comments section of the SA article, but the problem I see with selling just OMAP is that a lot of TI-exclusive IP currently goes into it. For instance the C6x DSPs and fixed function video decode blocks, but probably much more than that. This IP goes into several SoCs and microcontrollers that extend to applications far beyond cellphones and tablets (arguably even OMAP extends beyond cellphones and tablets) and makes it questionable how much this tech is anchored to wireless. I've used a C67x platform in an aerospace application, for instance..

So the question is, would TI really be selling just OMAP and then licensing all of the IP they're using so it no longer becomes TI exclusive (and I presume that company can use it however they want so long as it's in an "OMAP" product), or would they just be selling a huge chunk of their digital division entirely?

TI is definitely pushing UMC (although hardly exclusively) for OMAP5, but what about all of this other stuff? A lot is probably made on TI's own fabs..
 
Arun said:
Anyway, as I said this isn't very likely - and there clearly isn't an ideal buyer. But it's not impossible that they're considering it. Then again it's not because there are negotiations that there will necessarily be a deal.
Click to expand...

Why not Apple or nvidia then? Very satisfied with what they have done so far or do they feel they can further grow the R&D team organically just fine?
 
OMAP is much much much much more than just a smartphone application processor business.
 
OMAP SoCs with CPUs specced at 600 MHz tended to stably over clock to a higher speed than many 1000 MHz competitors could reach; TI's skills at implementing a licensed ARM core are tops despite not getting the recognition that Intrinsity's optimized lay outs had.

They've also recently moved to a very competitive update cycle for OMAPs to match Samsung and nVidia. The OMAP division is right there with the best in the industry overall.
 
Why would Apple want to buy TI's OMAP division? Apple already designs their own ARM processors via PA Semi and Intrinsity...
 
I've got to admit Broadcom would be a pretty good fit. Much better than Intel/AMD/NVIDIA. They've been investing quite a bit of money in their application processors but I don't think they are really seen as a credible top-tier supplier by the majority of the industry, and I'm not sure I see a path for them to be so without a major acquisition.

One disadvantage for TI is that Broadcom really wants to sell their own audio/power management/capacitive touch/etc. chips so TI's analogue business would lose those sockets whereas they could have kept some of them with another company acquiring OMAP. This is all assuming Charlie isn't full of it though - and even if he's not, he's clearly hedging his bets and implying this is not a done deal yet.

P.S.: I also love how Charlie's sub-title is "this one is not a shock" despite him not mentioning Broadcom at all in his original piece. Is he implying that it would have been a shock had he named the right one? That's an impressive level of self-awareness.
 
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