Atheros is one of the latest chipmakers to help GPS navigation device makers in their quest to put their devices in more cars, cell phones and pockets.
Late last year, Atheros Communications (NasdaqGS:ATHR - News) entered the GPS chips market when it bought privately held u-Nav Microelectronics. Though the purchase was for a modest $54 million, it propels Atheros into a fast-growing market.
"Our sense is GPS is a technology that will become more and more important," Atheros Chief Executive Craig Barratt said in an interview.
By bouncing signals off satellites, users of GPS devices -- now often included in cell phones and cars -- can know their location, direction, speed of travel and the time of day, among other things. The Global Positioning System was created by the U.S. government to help the military determine their geographic locations while in the field. Now, just about everyone is using them.
Atheros will face tough competition. The growth market has attracted such bigger rivals as Texas Instruments (NYSE:TXN - News) and Qualcomm (NasdaqGS:QCOM - News).
"With so many companies competing, it will drive the price of GPS devices down," said iSuppli analyst Tina Teng. And that means lower GPS chip prices.
Teng says others besides Atheros will be attracted to the GPS market, drawn in part by laws that mandate that all new cell phones have e-911 services. Including GPS in a mobile phone is one way to provide e-911, which tells authorities the exact location of a cell phone user who dials the 911 emergency phone number, for quicker emergency response.
"As a result, youll see a lot of connectivity-specialized companies like Atheros coming to this market," Teng said. "Theyll compete with big vendors like Texas Instruments and Qualcomm."
A maker of wireless and networking chips, Atheros will have to trudge uphill.
"Its going to be tough for them in the initial years," as it takes on established players in GPS, Teng said.
For now, Teng says theres only modest demand by consumers for GPS in cell phones, though she expects demand to rise in coming years.
Dean Freeman, an analyst with research firm Gartner, says Atheros buying u-Nav is part of the trend in the increasingly competitive chip industry.
Chip firms with less than $200 million in annual revenue are targets for larger companies.
For Atheros, he says, it was easier to buy u-Nav and its GPS chip designs rather than build them.
"Companies are looking to find ways to strengthen their position in difficult times," Freeman said. "It could be by mergers or by cutting off a piece of the business to raise money, or finding some sort of partnership."
Just since December, for example, STMicroelectronics (NYSE:STM - News) said it would buy Genesis Microchip, and ON Semiconductor (NasdaqGS:ONNN - News) said it would buy AMI Semiconductor.
The chip industry always has been volatile, but the pace of mergers is picking up, Freeman says.
"Its getting more expensive to do business in the chip industry," he said. "You have to find ways to do business more economically. One way to do that is to join forces."
Late last year, Atheros Communications (NasdaqGS:ATHR - News) entered the GPS chips market when it bought privately held u-Nav Microelectronics. Though the purchase was for a modest $54 million, it propels Atheros into a fast-growing market.
"Our sense is GPS is a technology that will become more and more important," Atheros Chief Executive Craig Barratt said in an interview.
By bouncing signals off satellites, users of GPS devices -- now often included in cell phones and cars -- can know their location, direction, speed of travel and the time of day, among other things. The Global Positioning System was created by the U.S. government to help the military determine their geographic locations while in the field. Now, just about everyone is using them.
Atheros will face tough competition. The growth market has attracted such bigger rivals as Texas Instruments (NYSE:TXN - News) and Qualcomm (NasdaqGS:QCOM - News).
"With so many companies competing, it will drive the price of GPS devices down," said iSuppli analyst Tina Teng. And that means lower GPS chip prices.
Teng says others besides Atheros will be attracted to the GPS market, drawn in part by laws that mandate that all new cell phones have e-911 services. Including GPS in a mobile phone is one way to provide e-911, which tells authorities the exact location of a cell phone user who dials the 911 emergency phone number, for quicker emergency response.
"As a result, youll see a lot of connectivity-specialized companies like Atheros coming to this market," Teng said. "Theyll compete with big vendors like Texas Instruments and Qualcomm."
A maker of wireless and networking chips, Atheros will have to trudge uphill.
"Its going to be tough for them in the initial years," as it takes on established players in GPS, Teng said.
For now, Teng says theres only modest demand by consumers for GPS in cell phones, though she expects demand to rise in coming years.
Dean Freeman, an analyst with research firm Gartner, says Atheros buying u-Nav is part of the trend in the increasingly competitive chip industry.
Chip firms with less than $200 million in annual revenue are targets for larger companies.
For Atheros, he says, it was easier to buy u-Nav and its GPS chip designs rather than build them.
"Companies are looking to find ways to strengthen their position in difficult times," Freeman said. "It could be by mergers or by cutting off a piece of the business to raise money, or finding some sort of partnership."
Just since December, for example, STMicroelectronics (NYSE:STM - News) said it would buy Genesis Microchip, and ON Semiconductor (NasdaqGS:ONNN - News) said it would buy AMI Semiconductor.
The chip industry always has been volatile, but the pace of mergers is picking up, Freeman says.
"Its getting more expensive to do business in the chip industry," he said. "You have to find ways to do business more economically. One way to do that is to join forces."
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