Israeli mobile TV chip provider Siano Mobile Silicon has gone back to investors for $24 million, and the simple reason is cashflow. Alon Ironi, CEO at Siano told us, ‘We need all this money to buy all the wafers to make the huge number of chips we are shipping.’
Naturally he won’t put a number on chip shipments but given that Siano has about 50% or more of the Chinese mobile TV chip market, shared only with Innofidei and Telepath, both local companies, then it will now be in the millions, and escalating every day.
We reported back in December that there had been a 6 month delay in China on CMMB mobile TV chip shipments, due to China Mobile entering the market and placing new DRM requirements on chipmakers. This blockade was broken in the last quarter with what was probably a few million shipments.
Regulator SARFT had made predictions that China would reach 10 million CMMB users by the end of 2009, while back in July we set a new prediction that something like 3.5 million mobile TV devices shipped to the end of November. We know from public sources that during the last quarter of 2009 China Mobile jumped from 1 million to 5 million TD SCDMA handsets, which is seriously ramping up the rate, and of those about 70% or more had CMMB chips in them.
If we put China Mobile on around 3.5 million CMMB devices in total, and previous CMMB shipments at around 1.5 million that puts total CMMB shipments at 5 million, with more than 2.5 million of those coming from Siano. However at the prevailing rate China Mobile could ship another 14 million CMMB devices this year, with the resulting upsurge for Siano taking it into profitability for the first time, as long as it can shell out for the chip runs. Siano has design wins in China at Motorola, Samsung, ZTE and Huawei and a few smaller non-handset businesses like aigo with its MP3 player range.
CMMB is based on STiMi technology, and uses two distinct spectra; S-Band which comes from a satellite and UHF from terrestrial transmitters. So far no satellite transmission has been initiated, because China has pulled its original satellite launch and has so far not re-issued the contract. So all the receivers are getting just one terrestrial signal in UHF. This makes the service city-bound and not receivable in rural areas, with about 300 cities having transmitters reaching half of the Chinese population.
This is Siano’s fourth (and probably last) round of funding so it will be looking to go public or get itself acquired in 12 to 18 months we figure. Funds came exclusively from Siano’s existing investors JVP, DFJ-Tamir-Fishman, Star Ventures, Walden Israel, and Bessemer Venture Partners, always a good sign. What’s the chances of Siano going public or being ac acquired in China, not the usually lucrative US?
‘This financing round marks the completion of the transition that Siano made in the last year, from a start-up company to an established volume supplier to multiple international brands such as Samsung, Motorola, ZTE, Huawei, Mio, Garmin, Dell and many others,’ said Alon Ironi, Siano’s CEO. ‘The new funds will help Siano solidify this position, build sufficient product inventory to secure vast supply, and in parallel continue to develop new products and penetrate new markets.’
You would think that getting a head start in China would be enough for anyone in the mobile TV business, but Siano knows that one market in one country is never enough. One other mobile TV chip company is US based Telegent, which operates almost entirely in China, a maker of chips to go into cellphones which pick up analog TV signals.
Telegent is expected to go public any day now raising $250 million with a valuation of $750 million expected, but we worry that getting the bulk of revenues from China is a weak position, both for Telegent, which is about to get competition from rival low power analog chips from RDA Microelectronics of China, and for Siano, which will soon have rival chips from Samsung and from Japanese suppliers.
In our view Siano needs to find at least a second big winner and there are plenty of opportunities, it has motherboard multi-protocol chips for some Dell devices, which takes it outside of China into PCs, and includes Japan, and it has had its first design wins with ISDB-T in Japan.
The Siano chip supports the DVB-H and T-DMB protocols in Europe and Korea, and reckons that it has as much as 30% or more of the fledgling Brazilian ISDB-T market. But while we have encouraged Ironi to think about ATSC M/H and the US market and he shares our thoughts that this market will take off like a rocket no sooner than 2011, he is probably more attracted to the in-car market, which his great French rival DiBcom has led, with in car DVB-T chips and its multi-protocol Octopus chip (due in volumes shortly).
The US is clearly going to be a strong market for automotive and that will be an ATSC M/H market and we have seen announcements trying to annex that at CES last week. But outside the US our contacts are telling is that car brands in Japan, Italy and Germany, are all going through a shift from only putting in-car Mobile TV into the most expensive models, to one where they put them in almost 100% of cars. If this trend pans out during late 2011, early 2012, then deals will be on offer now and Siano should be chasing this opportunity down now if it wants to open up another front away from China, for instance in the heartland of Europe. If it goes down this route it would put it directly up against DiBcom, and its own, rather newer, multiprotocol efforts.
But we shall certainly see some interest this year in buying out Siano, probably from one of the US or Chinese major chip design firms, if it continues to take the lions share in the Chinese market ‘ and now it has the funding to manage that.