Strategy Analytics feels Marvell’s lack of exposure to high volume handset makers, lack of a visible long-term baseband product roadmap and missing technology pieces like RF transceivers will force the company to reconsider its position as a cellular baseband processor supplier. Marvell is a prominent player in application processor and connectivity market but a minor player in the cellular baseband market. Since acquiring Intel’s cellular business in 2006, Marvell has made limited progress in the cellular baseband processor market where as competitors Infineon, Qualcomm, and ST-Ericsson built scale during the same period. The company's total cellular revenues (including basebands, application processors, connectivity) are still less than one billion dollar.

Research in Motion (RIM) is Marvell’s biggest cellular baseband customer but Marvell is expected to lose to share to Qualcomm in the long-term. Qualcomm already supplies basebands to over 25 percent of the RIM’s handsets (mostly CDMA). Freescale also recently scored some baseband design-wins at RIM at the expense of Marvell although Freescale recently gave up its baseband efforts. Marvell’s other cellular baseband customers include Palm, Asustek, and some Asian ODMs. Most recently the company scored Ophone TD-SCDMA Android smartphone design-wins at China Mobile and we believe that most of the TD-SCDMA baseband IP belongs to China Mobile and affiliates. Marvell's competitors MediaTek, ST-Ericsson are also investing in TD-SCDMA and most recently Qualcomm also expressed its intention to compete for TD-SCDMA design-wins in China next year. We don't see how a niche market strategy can be successful for this R&D intensive technology.

The company's lack of RF transceiver products is likely to have an impact on its penetration in entry level and mid market handset segments where transceiver-baseband approach is appropriate. The lack of visible LTE roadmap could put Marvell behind its competitors Qualcomm, ST-Ericsson and Infineon. We believe that growing R&D costs to develop advanced communication IP could put pressure on Marvell to reconsider its long-term position as a baseband vendor.

We feel that Marvell could perhaps partner with companies like MediaTek or Infineon who lack high-end application processor technology. Marvell's application processors are already popular in the Chinese smartphone market and could be a good fit for MediaTek. However it is not clear whether these companies are interested in Marvell's XScale technology.

Sravan Kundojjala

Client reading: Baseband Processor Profile: Time for Marvell to Reconsider Its Baseband Position