TI insists it will hold on to OMAP

Last year there were many reports swirling that Texas Instruments would sell off its OMAP applications processor business to reduce costs and complete its exit from core mobile device chips. However, despite rising competition for the venerable OMAP platform, TI's CEO Rich Templeton insisted the company remains fully committed to the business.

TI is completing its withdrawal from the handset baseband chip market, which was sparked when Nokia, its largest customer, shifted to a more diverse supply chain and then started declining in its purchases across the board. However, many believe its timing is poor as it has been left without an integrated processor/baseband system-on-chip, at a stage when many rivals are trying to achieve such a platform in order to compete with Qualcomm. Intel acquired Infineon Wireless for this purpose while Nvidia snapped up Icera.

The rising pressures on smartphone cost and power efficiency is focusing the market heavily on highly integrated offerings and this had sparked speculation that TI would defocus on handsets, except in providing the 'combo chips' - incorporating Wi-Fi, Bluetooth and other non-cellular radios like GPS - which sit alongside the main SoC. This remains an area of strength for the firm, but it has increasingly majored on its analog business, as well as platforms for the infrastructure side of the mobile world.

Despite all these trends, Templeton said, during an investor meeting last week: "I think it is a highly intriguing opportunity in terms of where we are and what our opportunity is. If [businesses] don't make sense over the long term we'll do something different." However, he was not as definitive as some had expected about OMAP's fate, adding that TI did not "have a public or private time frame for what we're going to do with OMAP".

In the first quarter, revenue from TI's wireless business fell by 43% year-on-year to $373m, mainly because of the final phase of the exit from baseband products, which were down to less than 3% of total sales during the period. To balance this, the chipmaker said it was

expanding the reach of its wireless business into new markets and experiencing a general pick-up in orders and design wins.

There is certainly intense pressure on OMAP. It is undergoing the transition from the well established OMAP4 to the as-yet unproven OMAP5, at a time when there are far more competitors than there were a few years ago, thanks to the entry of formerly PC-focused players like Intel and Nvidia. But the most immediate threat is the ascendance of Qualcomm's Snapdragon. Last month heard whispers that long term TI customer Motorola Mobility might defect to Snapdragon for some models including Atrix 3. Qualcomm captured around half of the revenue in the smartphone app processor market in 2011, according to Strategy Analytics, with TI in third place, after Samsung and ahead of Marvell and Broadcom. Qualcomm also overtook TI for the first time in terms of annual unit sales of mobile processors.