Market Insight

Trident Sells DTV Business as Profitability in TV Supply Chain Withers

April 17, 2012

Randy Lawson Randy Lawson Subject Matter Expert

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A few months after news broke of Trident Microsystems selling their STB business to Entropic, Sigma Designs is now announcing that they have been selected as the successful bidder to acquire Trident Microsystems digital TV focused chipset business.    

As recently as 2007, Trident was the leading supplier of TV processor chipsets within the digital TV market, garnering over 19% share of the market in 2007 on revenues of $294 million.  While the flat panel HDTV market continued to mark strong growth from 2007 through 2011, where total flat panel units shipped grew by more than 150%, up from 91 million units to over 230 million units during that time span, the TV SoC market saw comparable growth as well, climbing from $1.5 billion in annual revenues in 2007 to $2.2B in revenues in 2011.  However, over that same time period, Trident witnessed their TV SoC segment revenues shrink from $294 million to approximately $130 million in 2011 due to share losses to primary competitors Mediatek and Mstar in Taiwan.

Due to stiff competition and difficult design-in requirements where many end systems offer thin profit margins, the market for TV processor chips saw widespread consolidation over the past several years , with previous suppliers such as Genesis Microchip, Micronas, ATi and NXP all being acquired at various points since 2007.  Despite the strong growth that the overall TV market has shown in recent years, the challenge of meeting ever more stringent cost requirements from the TV OEMs, while maintaining “good enough” image quality from the video processor, has been very challenging for many chip companies.  2011 saw several primary suppliers such as Zoran (acquired by CSR), Broadcom, and Intel all bow out of the TV SoC market as profitability across the TV supply chain withered.  With these companies exiting the TV processor space, Taiwanese suppliers Mstar and Mediatek collectively now represent approximately 60% of all TV processor revenues.

As the TV market has begun shifting towards more complex, “Smart” systems, using more open hardware and software platforms such as Google TV and ARM based solutions, with new multi-core processors with dedicated GPU resources becoming required features in mid-to-high end TV systems, the TV SoC market is becoming an attractive new market for formerly STB-focused suppliers such as Sigma Designs. Consumer electronics as a product category has broadened to include new categories such as consumer notebook computers to new mobile smartphones and tablet devices, all of which have incorporated more traditional CE functionality such as audio and video features into their suite of features.  As consumers and OEMs continue to pursue increasing levels of interoperability and open access to content across multiple devices, the underlying technologies are  converging where hardware and software for many of these products are similar enough that application processors with native multimedia support can serve the previously closed-system of TV sets as well.

Read More About DTV & STB Semiconductors > SoC Supplier Shakeup in 2011: Growth Rate Slowing for TV Semiconductor Outlook 

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