The recent announcement of the EMP merger with ST-NXP wireless entity is another milestone in the consolidation of the wireless chipset suppliers. A mature industry vaporizes margins and forces consolidation. It had been a forgone conclusion that there were too many players in this exceedingly price sensitive business.
A cursory look at the list of companies competing in baseband ASICs until a few years ago reveals, that more than half have either ceased their operation or had been acquired.
TI
Qualcomm
Freescale(Motorola)
Infineon
Broadcom
Mediatek
Icera
NXP(Philips)
ST
EMP
ADI
Intel
Agere
Silicon Labs
Prairecom
Skyworks
From the list above, Infineon and Freescale wireless businesses cannot survive as independent entities. With the current wave of consolidation, it makes a lot more sense for them to merge. Infineon has a proven ultra low tier portfolio and Freescale has a strong presence in high tier 3G. The combined entity can then count RIM, Apple and Motorola as their customers. Furthermore, operational efficiencies can result from such a venture as they do have overlapping portfolio.
This will then eventually leave three to four major players to fight in the market. Broadcom who has been investing heavily in cellular space, does not have a significant market position. It has a tough life ahead of it. However, to its credit, it has the fighting zeal, and with Nokia on its side may come out on top.
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