Chip majors on the prowl for WiGig

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Deploying WiFi in 60GHz spectrum was once seen as a niche option, but the emerging WiGig technology is heading for the mainstream, supporting multi-gigabit connectivity between smartphones and TVs, or PCs and peripherals, not to mention small cell backhaul. The increasing usefulness of WiGig, especially when pressure starts to mount on 5GHz spectrum, will spark acquisitions of those players with advanced chips and/or patents. Qualcomm bought Wilocity last year, and now Lattice Semiconductor is to acquire Silicon Image, which has been active in several important areas of emerging wireless technology such as 60GHz.

True to its core business in high speed video links, it pioneered another 60GHz would-be standard, WirelessHD, and then acquired WiGig specialist SiBeam in 2011. Its commercial performance has never really reflected its R&D significance, but some of its work should be deployed at greater scale under the ownership of Lattice.

The larger firm is offering $7.30 per share, a premium of 23.7% on Silicon Image’s closing price last Monday, valuing the company at about $600m.

“What you have here are two sub-scale companies that create a lot of scale in combining and I would say there is very little product overlap,” Dougherty analyst Charles Anderson told Reuters. “It’s a type of transaction that has gained a lot of favor recently.”

Silicon Image has been exploring its “strategic alternatives” for a few months, under
pressure from activist investor Engaged Capital. It was hit last year by reduced design wins with one of its largest mobile customers (unnamed) and said in December that would contribute to a year-on-year revenue decline of about 10% in 2015. Lattice is also looking for a growth injection, having said last week that its Q414 revenue would be sequentially flat to 4% lower.

The smaller company has been seeking to maximize the value of its innovations recently. Last year, it spun off its smart home activities under the label Qterics, and that unit won a $7m investment from Qualcomm. It has also been active in another area of emerging importance for next generation wireless – phased array antenna designs, which allows for constant reconfiguration in millimeter wave spectrum, to target beams very precisely. The firm is the first to create a commercial product in this area, with a phased array antenna for use with WirelessHD.

But while those WirelessHD innovations will be valuable in the home media network space, the WiGig work is more strategic, since that technology has the weight of the WiFi community behind it (the WiFi and WiGig alliances merged in 2013). That is why the SiBeam acquisition was important, since that company, initially a founder of the WirelessHD Consortium, had also branched out into WiGig chips. It was one of the pioneers of implementing ultra-high speed 60GHz chips in CMOS, reducing cost so that they became viable for mass market consumer electronics, and created hybrid WirelessHD/WiGig chipsets as early as 2011.

All this innovation will now be part of Lattice, but it will be under pressure in 60GHz from some large players such as Intel, Qualcomm and Toshiba, all of which have invested heavily in WiGig. Last summer, Qualcomm acquired WiGig pioneer Wilocity, giving it an early position in this technology (which is underpinned by the emerging 802.11ad standard), as well as a budding alliance with Cisco, and IPR in high frequency spectrum technologies, which will be important in the near future for small cells and, further out, for ‘5G’.

Wilocity was founded in 2007 by former engineers from Intel’s Centrino WiFi group and was the first company to deliver commercial silicon supporting preliminary drafts of the 802.11ad standard.

WiGig is an extension to the 802.11 family of specifications and achieves multi-gigabit speeds (up to 7Gbps in theory) by harnessing the high capacity of the 60GHz licence-exempt band. Initially a competitive effort to very high speed efforts within the main 802.11 groups, the 60GHz technology gradually came closer to the WLAN mainstream as the 802.11ad specifications matured, and its organization was finally merged with the Wi-Fi Alliance, which kicked off a certification program in September last year (though still retaining some separation by keeping the distinct WiGig name and logo).

Now it is widely seen as complementary to the other new high speed standard, 802.11ac, which runs in conventional 5GHz Wi-Fi spectrum and can achieve speeds of over 300Mbps using MIMO and wide bands (and theoretically get up to 1Gbps).

The short-range technology has initially appeared mainly in peripheral connectivity applications like Wireless USB but its main potential is seen in home video networks, enterprise or even hotspot systems, and multimedia mobile devices. Its limitations in range mean it will often appear in triband combinations alongside 2.4GHz/5GHz 802.11ac radios, or will be targeted at short-distance applications such as smartphone/TV data transfer.