Broadband wireless excites Anadigics

Why have you come to IMS 2008?
We re looking at developments in power amplifier technology, for both mobile devices and infrastructure. Femtocell is an area that we re looking into. Also we are monitoring some technologies that are being developed. GaN is one area that we re observing, although we are looking at different technologies and have not made a commitment to it.

What is your view of femtocell technology?
It s an exciting market. We believe operators are committed to investing in femtocells as a way of extending their capacity and enabling more subscribers.

It s more than just a booster in the house. It enables the operator to offload the signal from the tower into the wired optical network, so operators have the wire as well as the wireless connection. When you re at home you can use your mobile device, but you go into the wired connection. You look at the operators: at any time, how many of your subscribers are at home using their cellphones? If you can offload those to a landline, how much more capacity can you gain? That s really the math, and it lets you get better data-rate connections in the home.

I would say that volumes and replacement rates will not be as high as the handset market – it s like a router business. It s somewhat of a consumer market, but it also has some of the characteristics that we see in infrastructure. It is a performance-driven, less price-sensitive market. The femtocell market is at an early stage, so it s a good time to enter.

What are the technical differences between handset and femtocell power amplifiers?
What we see is that femtocells require higher performance. A femtocell box at any time has to be able to handle multiple signals and multiple users at home, so these amplifiers tend to be more optimized for performance, linearity and other requirements, not just for power consumption and battery operating time. So we see in the femtocell market, for example, that supply voltages could be higher than battery-operated mobile products.

The need for high-performance components makes femtocells well suited to our technology differentiation in power amplifiers. We believe that we can leverage that and play well in this market. We are developing products and talking to specific customers and partners. We also talk to the operators, so we have a good understanding of the "ecosystem" in the femtocell market. We will be announcing products for this market in the second half of this year.

How readily can Anadigics existing technology serve these applications?
We believe that our differentiated InGaP-plus technology can do a very good job for femtocells. If you look at traditional wireless infrastructure products, InGaP technology can serve up to the driver amplifiers. In the output stages, that s where the technology falls short. That s where you ll see a lot of interest in GaN and other high-voltage technologies. We re not currently playing in that market, but as time goes on we ll reassess our strategy.

In the femtocell application you don t need high power. In femtocells you stop at the 1 W power level. With our InGaP-plus, which integrates HBT and PHEMT on the same die, we were the first company to introduce this kind of technology in high-volume production. Something like more than 90% of the products that we ship today are based on that technology. All of our competitors are still talking about developing or introducing it. We are well into maturity. Currently we are introducing a new version of this technology that will allow us to integrate more functionality. We can integrate literally all of the front-end components, with the exception of some of the filters that are SAW or BAW technology. Especially for some applications like WiFi, we believe that we have the most integrated solution.

How does the conflict between WiMAX and Long Term Evolution (LTE) affect Anadigics?
Obviously we ve been following the development of WiMAX. That s been a business plan to extend the hotspot concept into a mobile network that has a range equivalent to cellular networks, but also high data rates in a similar manner to WiFi. From the established operators the view is that 3G, HSPA and EV-DO networks already offer high data rates and mobility combined. However, they don t offer the data rates that WiMAX is promising. In their view they can expand the 3G networks to LTE and be able to offer similar data rates to WiMAX, yet maintain the mobility and all of the other services that consumers are used to. So it s really a competition between the established cellular operators, who will hold out for LTE, and the newcomers to the market that are bringing in WiMAX.

Our strategy to handle this is very simple. We want to be anywhere there is broadband data connectivity, whether it be wireless or wireline; WiMAX or LTE; cable or fiber. Our strategy is: wherever we see broadband data connectivity we want to be in the RF front-end components. We are well positioned in the WiMAX as well as in the 3G and 4G standards.

When you look at it, the spectra are like real estate – they will be developed. Whether WiMAX or another standard wins in the end, we will have the products for both markets. We believe that there will be healthy competition between the two. So it s not an either/or scenario for us. Its different real estate, different spectra and services will be deployed regardless of which standard we want to be in.

How do you decide which new technologies you are going to develop?
One technology cannot cover all of our market. You cannot cover cable amplifiers and fiber amplifiers as well as handset mobile power amplifiers.

We ve been able to cover this whole market with our InGaP-plus technology combined with our more traditional MESFET technology that we use for higher voltages, for example in producing very linear line amplifiers (for cable TV). But that does put more burden on our current technology and that s one of the reasons why we ve come to IMS, to look at new technologies and how they could play in this market.

In the cellular and WiFi space – my side of the business – we see technology being driven along two vectors. First, there s a multiband, multimode integration push. If you look in any 3G handset today, you ll more than likely see two or three power amplifiers inside. With the new spectrum that s released in the US – 700 MHz – the plan is to have LTE developed in that spectrum. We have to address the many different bands used around the world, and we also see a strong push to integrate more functionality into the front end. That s an area of focus for our technology. How can we integrate more of these functions into the same package, the same die.

The other vector is performance. We still see a continued push on performance improvement. If you look at WiMAX products, for example, today the first-generation WiMAX products are designed for embedded applications or data-card applications for mobile systems operating with a battery. We believe they ll still be pushed to improve the performance in terms of power consumption. That will be true of LTE – any technology that uses OFDM modulation requires high-performance power amplifiers, so we have to continue building up performances.

What is the next big market for Anadigics?
Embedded module applications for notebook computers. Today more than 98% of notebook computers produced have embedded WiFi modules. We supply most of them through Intel but, if you look at the attach rate for cellular modems in notebook computers it s around 2–3%, which is very low. We believe that that number will go up. Qualcomm has announced the Gobi module, which is a multimode, multistandard module. We work very closely with Qualcomm. We always appear on all of their reference designs and we re frequently primary source.

In the past the cellular modem used to be specific to a standard – you d buy one that works for Verizon, or you d buy one that works for Vodafone. Now with a Gobi module it s multimode and multistandard, so it can operate more flexibly.

Today if you buy a notebook computer, you have WiFi, you have Bluetooth and you have infrared. We think in the future there will also be a 3G high-speed modem and possibly WiMAX, or WiMAX/WiFi with a dual mode. They ll have these technologies built into them so that the consumer will be able to choose what service they want to sign on to and the operators will compete for their business.

As the costs of these 3G high-speed modules come down and they become more multistandard we believe that the attach rate could exceed 30%, making it an important new market for us.

How are the current economic conditions affecting Anadigics business?
You look at Anadigics business today and it s very global. In the wireless space, in my segment, maybe 85% of our business is Asia. The Asian economy hasn t had anything like a similar situation to the US economy in terms of signs of the slowdown, and that s reflected in our business. That s where design and manufacture are being done and that s where we re winning the business and supplying the product.

We see continued strong demand for wireless products. There has been a recent resurgence of investment for cable infrastructure and we see that reflected in our business. Fiber-to-the-home is another area that is starting to grow for us.

Our strategy is that if you look at the handset market, the forecast is that it will grow by around 15% this year. Anadigics is focused on the 3G space within that, after we exited the 2G market a couple of years ago. That space is growing. When you read the reports, even though low-end handset sales are slow, there is still a lot of demand for smartphones and more feature-rich phones that we re in. Our Asian customers are seeing a lot of 3G phones sold in Europe, Asia and Japan. Also, although they keep delaying, 3G will happen in China.

We re also seeing an interesting trend for 3G phones in shops. If you look at 2008 compared with last year, many of these smartphones are now priced at sub-$200. A lot are $100 or less. Of course, these are subsidized prices, but last year most of these smartphones were being sold for $300–$500. The iPhone is a good example; it s now being sold for $200. You see PDAs, Palms for $99. That s accelerating the adoption by consumers. I think that the services are also catching up with the features on these phones. In my house we used to have five cellphones: now we have three smartphones and two cellphones!

Ali Khatibzadeh is senior vice president & general manager of Anadigics wireless business, which is responsible for component sales into cellphone handsets and other mobile devices.

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