US chips design firm Sigma Designs is “considering its strategic alternatives” with the help of Deutsche Bank, usually a coded expression for putting all of part of itself up for sale.
Sigma is one of those few chip firms still providing SoCs for set tops and smart TVs, but of late it has been growing in IoT devices on the back of its low power LAN class Z-Wave technology – a direct competitor to the more globally accepted ZigBee and Bluetooth technologies.
Sigma said at its last results conference that it is carefully reviewing all of its product lines to determine which offer the best synergistic fit with its long-term growth plans. The much larger Marvell, went through a similar strategy review before putting in new management and selling off divisions, including its G.hn Home Networking chip.
We mention Marvell, because Sigma is still making G.hn chips and has some design wins on the powerline version of it, so that too could be on the block soon, especially as that market has still not reached the kind of volumes it needs to be profitable.
Sigma got into this business by spending some $160 million on acquiring Israeli home-networking chip maker CopperGate in 2009 which had pioneered HomePNA, the precursor to G,hn, which also took it into the HomePlug market, in turn pioneered by Intellon, which was acquired by Atheros. The HomePlug market is now considered end of life, with no further powerline technology versions planned, and yet with the HomePlug run rate still making it valuable, that is surely something that Sigma will want to offload.
Rivals to the G.hn camp will be delighted that a second US chipmaker for the home networking technology is down at heel, and ready to move onto pastures new.
Sigma put out a statement which said, “This review may result in Sigma continuing to implement value-enhancing initiatives as a standalone company, such as the continued implementation of its previously announced restructuring plans, a sale of the company or certain product lines, or other possible transactions.”
In November 2015 Sigma acquired Bretelon for $22 million in cash, to take it into what it calls Mobile IoT. It is primarily a software firm which also makes specialized ASIC chips, presumably this will now be focused on the fast emerging LPWAN market.
The latest Sigma results showed quarterly revenue of just $39.6 million, down from $53.8 million a year earlier, with slightly declining margins, and a small operating loss and a $13.4 million net loss. It had lost $6 million a year earlier.
It promised that fiscal 2018 would be a transition year as it focused on IoT, and achieved LTE network certification for its mobile IoT. It should be starting field trials for products now. It also promised a next generation version of Z-Wave which is low enough power to embrace the sensor market.
Thinh Tran, the founding CEO of Sigma Designs is a long term engineer of distinction, coming to the fore in the IBM compatible mainframe market through Amdahl and Trilogy Systems, in the 1980s and he formed Sigma in 1982. He’s too smart to risk it all on trying to continue on his own.