Semiconductor sales rebounded over the past year, which is good news for the chip industry. One of the main reasons for the upturn was the swelling market for mobile phones. With increasing emphasis on computing power in handsets, that trend is only going to increase.

The Semiconductor Industry Association (SIA) reported a 27.4 percent increase in chip sales during the third quarter of 2004, compared to the same period a year earlier. SIA also predicts record sales of $214 billion for the entire year, followed by a year of flat sales overall due to oversupplies, but followed by increases of 6.3 percent and 14.2 percent in 2006 and 2007, respectively.

SIA says consumer products, including mobile phones, will drive growth as consumers become more interested in portable digital media. "Advances in computing, digital media processing and wireless technology are enabling our industry to create lifestyle-changing devices and gadgets that we could imagine a few years ago," Jen-Hsun Huang, president and CEO of Nvidia, told analysts in an SIA briefing.

George Scalise, president of the SIA, says sales of chips to cell phone manufacturers has exceeded the association's expectations.

BIG DEMANDS The interest in cell phone chips is being driven in large part to the increasing demands being placed on handsets to act as mini-computers. That push comes from the 2.5G and 3G networks being launched globally and the rich media services they will offer, including cameras, video, 3D gaming and stereophonic music. As mobile phones push the envelope of services, so, too, are handset manufacturers pushing chip suppliers for faster processors and more memory without sacrificing battery life.

"We're seeing a market evolution," says Mike Phillips, director of strategy for Europe, the Middle East and Africa for Freescale Semiconductor. He says the wireless chip industry is transitioning into the 3G world, with Europe and parts of Asia in wideband CDMA and the United States with combination of W-CDMA and CDMA 1X EV-DO.

As with most wireless chip manufacturers, Freescale saw this trend coming several years ago. Freescale's response, Phillips says, is to become a "platform" provider as opposed to providing chipsets. By that he means Freescale focuses on the traditional hardware, plus software and integration.

"It reflects the fact that everyone is moving up in the food chain," Phillips says. Handset manufacturers used to take the chips and do their own integration, but now they want the chipmakers to do that so they can focus more on applications, the operating systems and the look and feel of the phone.

He predicts only a handful of traditional chip manufacturers will become platform providers because it requires expertise and experience not easily attained.

Freescale, Phillips says, also is focusing on that nirvana called "seamless mobility," where handsets will automatically discover and connect with whatever wireless network technology is available and best suited for the user's task. That would include the wide-area networks in all its flavors, as well as local and personal area networks.

QUALCOMM'S SHARE One of the main beneficiaries of the move to 3G will be chipmaker and CDMA technology leader Qualcomm. Qualcomm's business will continue to grow as more W-CDMA and EV-DO networks are launched. Michael Thelander of Signals Research says Qualcomm will have a 31 percent share of the chip sales for W-CDMA handsets by 2008, followed by Texas Instruments at 20 percent and Ericsson Mobile Platforms at 14 percent.

In the CDMA realm, Qualcomm continues to develop chips for CDMA 1XEV-DV, although the market pull is for the data-only technology EV-DO, says Luis Pineda, marketing vice president for Qualcomm Technologies. Both Verizon Wireless and Sprint are using EV-DO in their network upgrades, and Qualcomm has been making EV-DO chips for some time.

In the first quarter of 2005, Pineda says, Qualcomm will start sampling handset chips for Revision A of EV-DO. That revision provides data rates up to 3.1 Mbps, compared to typical rates on existing networks of 600 to 800 kbps. It also may mean EV-DO operators can offer voice over IP.

EV-DO Rev. A likely will be available commercially in 2006, Pineda says.

Qualcomm's roadmap also includes an EDGE/HSDPA chipset in 2005 and a "world chip" that combines UMTS/EDGE/HSDPA with CDMA2000 1X in 2006. The company's "convergence" platform for 2005-06 will support dual CPUs, 6.0 megapixel cameras, 30 frames per second video record and playback, 3D graphics acceleration and high-fidelity digital stereo audio.

TD-SCDMA SUPPORT The importance of the Chinese market hasn't escaped chip manufacturers, either. Both Analog Devices Inc. (ADI) and Texas Instruments announced at the 3G World Congress in Hong Kong that they will support China's TD-SCDMA technology with chip designs. The Chinese government is expected to grant 3G licenses soon, some of which may include the TD-SCDMA standard.

ADI, which also is shipping EDGE chips to handset manufacturers, says it has the world's first complete chipset for the TD-SCDMA low chip rate (LCR) air interface. The SoftFone-LCR chipset uses ADI's Blackfin processor and provides baseband signal processing, analog-interface functions and radio.

Doug Grant, director of business development for RF and wireless products for ADI, says the SoftFone-LCR chipset also will enable handset manufacturers to have 3G handsets that have the same battery consumption as current 2G models.

Texas Instruments also announced two base station platforms at the Hong Kong conference. One is a DSP, the TMS320TC100Q, which is optimized for TD-SCDMA. The other is the ADS5413-11 analog-to-digital converter for base stations. The converter is optimized for multi-carrier wireless base station transceiver applications for all major air interfaces, including GSM, CDMA, W-CDMA and TD-SCDMA.

The DSP, which also can be used for GSM/EDGE/W-CDMA base stations, is designed to provide bandwidth optimization for 3G services while decreasing overall power consumption up to 20 percent per channel, according to Bob Derrilick, technical marketing director for TI's wireless infrastructure sector. The chip can reduce the number of processors for a full carrier from three to two, providing both a cost and power savings.

TI also unveiled its "Hollywood" digital TV chip designed for handheld devices, including mobile phones. The chip is expected to sample in 2006, with devices in stores a year later. The chip will use the Digital Video Broadcasting-Handheld standard, which Nokia is testing in Europe.

In the field of high-performance processors, Britain's ARM recently announced its Cortex family of CPU cores, which will have two series for mobile phones. Dave Steer, segment marketing director, says ARM still is committed to is existing processors, such as the ARM9, ARM10 and ARM11. Toshiba recently licensed the latter.

The three Cortex series include the A, which will include applications processors for mobile phones; the R, for embedded processors for real-time systems that might also be used in cell phones; and the M, which is for micro controller and low-cost applications.

Steer says the ARM11 family includes security and digital rights management (DRM) capabilities, called TrustZone. The Open Mobile Alliance DRM standard can be implemented on top of TrustZone, he says. The first handsets using the ARM11 are expected to ship in 2005.

Phones running the ARM9 processor are normally for 2.5G and 3G networks, while ARM7 is used more often in basic handsets, Steer says.

RF Micro Devices (RFMD) recently announced it had started shipping its Polaris Total Radio chips, which are used in the Ogo messaging handheld sold initially on the AT&T Wireless network. The Polaris RFIC includes a GSM/GPRS transceiver and RFMD's PowerStar power amplifier.

As mobile phones continue to get smarter and demand more processing power and complexity, it's a certainty the flurry of wireless chip announcements will continue.