"Samsung used to be the target," Marvell VP cellular engineering Dr. Joseph Perl tells "Globes" in an interview. "We invested immense efforts to meet its demanding timetable and performance requirements."
In June, Marvell Technology Group (Nasdaq: MRVL) unveiled its PXA968 chipset for Samsung Galaxy smartphones. The PXA968 was developed at Marvell's development center in Petah Tikva. The center, which Marvell acquired from Intel Corporation (Nasdaq: INTC) for $600 million in 2006, is based on DSP Communications, which Intel acquired for $1.6 billion in 1999.
Perl, a former CEO of DSP Communications, has returned to run the development center based on the company. He is responsible for 500 employees, a third of Marvell's wireless and mobile research division. As the world's leading processor makers for mobile standards, such as Intel, Texas Instruments Inc. (NYSE: TSX), and Qualcomm Inc. ((Nasdaq: QCOM) chased after Apple Inc's (Nasdaq: AAPL) iPads and iPhones and their rapid growth, Marvell struck out on a different path.
In 2010, Marvell bet on developing a platform for the Chinese 3G standard (TD-SCDMA), and it now develops chipsets for China Mobile Ltd's (NYSE: CHL; HKSE: 0941) popular oPhone and other devices. Marvell achieved strong first quarter growth from its Chinese mobile operations, where the company saw 25% growth in demand. Wireless and mobile segment sales totaled $226 million for the first quarter, 11% more than for the corresponding quarter of 2011, accounting for 28% of total revenue.
Perl's job may have a strong element of nostalgia, but he also outlines Marvell's strategy to be more relevant outside China. His main project in Petah Tikva is the development of a 4G LTE mobile modem, which will reach market in a few months. Marvell, which specializes in low-cost solutions, now wants to offer 4G solutions for the most popular smartphones in the West, including iPhones and Galaxies, as well as tablets.
DSP Communications was the first company to produce an alternative to Qualcomm's mobile modems, but it now faces another challenge. "We want to graduate to a new class in this market," says Perl. "With LTE, we want to be embedded in leading products. I don’t know if we'll succeed in being embedded in Apple, but we would definitely like to be. There are developments in the market. Amazon, Google, and Microsoft understand that, ultimately, you must sell something real, some gadget, and not just software or an application. More companies will enter this market, and our chipsets have potential."
Marvell has three core businesses: system control and memory management processors; network communications equipment, based on its 2001 acquisition of Israel's Galileo Communications; and chipsets for computing and mobile phone standards. The company's strategy puts all a phone's functions on a single chipset. It supplies the modem, which was developed in Israel, with a processor that manages the user interface and multimedia, and additional components, some of which are developed at Marvell R&D centers and others are supplied by partners.
Perl says that the differences between DSP Communications in the 1990s and Marvell's current development center based on the company go far beyond DSP Communications' main customer, Blackberry maker Research In Motion Ltd. (Nasdaq: RIMM). "Today, the phone is far more complex, and all the players have changed, except for Qualcomm."
The company has also changed, although he says that a tenth of its employees once worked for DSP Communications. "We had 100 employees at DSP Communications, which increased to 300 employees when it was sold. But we now have 500 employees. This is already a big company, and decisions are taken overseas. I came here to help 500 employees get established."
Published by Globes [online], Israel business news - www.globes-online.com - on July 10, 2012
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