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StreetInsider.com  Mar 28  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/InterCloud+%28ICLD%29+Continues+Higher%3B+Refutes+SIRF+Allegations/9326798.html for the full story.
Clusterstock  Jul 16  Comment 
A hedge fund manager known for his prominent Twitter presence is under investigation and has attempted suicide, The Southern Investigative Reporting Foundation reports. The Southern Investigative Reporting Foundation is a project of veteran...
Life Science Lab  May 26  Comment 
SIRF Roundtables is organising the Sustainability National Forum which will take place from 7 to 8 September 2010.
Motley Fool  Jun 19  Comment 
Picking up pennies can make you millions.
Marketwire  Apr 22  Comment 
FREMONT, CA -- (Marketwire) -- 04/22/09 -- Ikanos Communications, Inc. (NASDAQ: IKAN), a leading provider of broadband semiconductor and software products for the digital home, today announced the signing of a definitive agreement to purchase the
Stock Gumshoe  Nov 3  Comment 
OK, so this one is kind of cheating again, because I've written about this company before. Andew Mickey of Breakaway Investor is pushing his favorite small cap technology stock again, the cell phone GPS company, and he is crowing about the fact...
The Average Joe Investor  Aug 3  Comment 
For anyone not familiar with SIRF Technology Holdings (Nasdaq: SIRF), they make the semiconductor chips that go into global positions systems (GPS) from companies like Garmin and TomTom. Well, to be fair, they started working with Garmin (Nasdaq:...




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Based in San Jose, CA, SiRF Technology Holdings, Inc. (SIRF) is the holding company of SiRF Technology, Inc., which is a fabless original equipment manufacturer (OEM) of global positioning system (GPS) semiconductor chipsets, semiconductor-based modules and associated software. Strategically, SiRF's product line provides GPS capability to high-volume consumer and commercial systems. The company went public in April 2004. Conexant Systems has a 20% stake in the company, which was acquired during the sale of its GPS chipset unit to SiRF.

What is GPS?

The GPS system consists of a constellation of 24 orbiting satellites and ground monitoring stations that are controlled and maintained by the United States Department of Defense (DoD). A GPS receiver can calculate accurately any worldwide position within 10 meters or less. This accuracy may be enhanced via a new supplemental system being developed by the Federal Aviation Administration (FAA), designated the Wide Area Augmentation System (WAAS), which incorporates additional satellites and ground reference stations. This will increase the overall positional accuracy to within three meters throughout the U.S. (and portions of Canada and Mexico) for properly equipped gear. Each satellite transmits low-power encoded radio frequency (RF) signals at two different frequencies one for military use and the other for civilian use. A GPS receiver must be in the line-of-sight of at least three different satellites to get a two-dimensional location (latitude and longitude) reading, or four satellites for three-dimensional positioning (which includes altitude data). The GPS receiver uses each of the satellites' relative positions and triangulation algorithms to determine the precise location of the receiver. Specifically, atomic clocks onboard the satellites supply key time-tag information required for calculating the time taken by the transmitted signal to reach the GPS receiver. The relative distance between the satellite and receiver can be computed given this timing information and the known transmission velocity of the electromagnetic energy. Like wireless handsets, RF signals can penetrate (with some signal attenuation) clouds, glass and plastic, but not solid objects like buildings or hills.

Products

SiRF's products provide GPS location awareness technology to other OEMs that embed the capability into the four targeted platforms: wireless handheld devices, mobile computing devices, other mobile consumer applications and automotive electronic systems. SiRF's ICs are found in wireless handsets, personal digital assistants (PDAs), notebook personal computers (PCs), digital cameras, watches, automotive navigation and automotive telematics systems, and automated toll roads.

SiRF's GPS technology is implemented in four forms. First, SiRF supplies stand-alone chipsets to OEMs that are directly embedded into an OEM's device. Second, OEMs can purchase third-party supplied customized modules that have SiRF chipsets already embedded into the module. Third, SiRF licenses the intellectual property (IP) cores to OEMs that integrate the GPS technology into the OEM's chips or chipsets. The IP cores consist of the chipset design code as well as the embedded GPS algorithm software. Lastly, SiRF licenses enhanced software-based products, including IP cores and algorithms, for use in several specific end-market applications.

SiRF Technology's products have a wide range of applications within the consumer, communications (wireless handsets) and automotive markets. The company's strategy is to supply the GPS capability to OEMs that can integrate it into their end products, rather than manufacturing a stand-alone end product.

Production

The company outsources semiconductor production to NEC, Samsung and STMicroelectronics foundries. Each individual product is sole-sourced at only one of the foundries. Product assembling and testing is outsourced to three contractors, ASAT, ASE and STATS ChipPAC. Competitors include Analog Devices, Motorola, Philips, Sony, Texas Instruments, STMicroelectronics, QUALCOMM, Garmin and Trimble.

Customers

Communications

The communications market appears to hold the most significant near-term growth potential. The company already supplies GPS chips and IP to both Nextel (for its Integrated Digital Enhanced Network phones) and Motorola (for its 3G handsets). It was announced that eight different manufacturers have designed-in the next-generation SiRFStar III product within wireless handsets set to ramp-up production in the second half of 2005. Management would only comment that each of these eight manufacturers may potentially have multiple products. Specifically, Korea's SK Telecom has designated three OEMs to embed the GPS capability within CDMA handsets that will be compatable with a SK Telecom service expected to roll-out later this year. Furthermore, the newly formed SK Telecom-Earthlink joint venture will offer a location-based service platform within the United States in the future. A Tier I OEM was already awarded a small chipset production order for inclusion within a CDMA handset. The SiRFStar III chipset will be designed into a WCDMA (wideband CDMA) handset by a European manufacturer, but will not ramp until early 2006. During the current year, it is expected that a number of location-based services will be launched in the United States, Europe, Korea and Japan.

Competitors




Finance

Sales & Revenue

Sales distribution is handled through a direct sales force, independent sales representatives and distributors. During the fourth quarter, consumer applications contributed 40% of sales, wireless phones 20% and automotive 40%. The SiRFStar II product line continues to generate most of the revenue. Promate, Leadtek, Gateway and Motorola each accounted for greater than 10% of 2004 revenue, together generating 64% of the total. On a geographical basis, 25% of revenue for 2004 was generated in the U.S., 57% came from Asia/Pacific, 10% came from Europe and the remaining 8% from other regions.

Market Analysis, Trends and Forces

Verticals

Cell Phones

Growth of Semiconductors along with increased GPS functionality; Not surprisingly cell phones have shown amazing growth in semiconductor content, and according to Info World most cell phones will have GPS capability by 2011.

Very strong sales of cell phones were a major contributor to the year-on-year increase in microchip sales.Cell phone unit sales increased by 31 percent from the first quarter of 2005 and ran substantially ahead of expectations. Unit sales are now expected to reach one billion this year. According to iSuppli, the average semiconductor content of a cell phone is now approximately $41 per unit. Cell phones now represent the second-largest market, after personal computers, for semiconductors. Cell phones and PCs now account for more than half of all semiconductor sales.

The SIA cited two factors a substantially shorter replacement cycle and very robust demand in China for cell phone growth. China now has approximately 410 million cell phone subscribers. China is adding new subscribers at the rate of five million a month, and Chinese consumers appear to be choosing high-end phones with increased functionality. The replacement cycle for cell phones has declined from an average of 26 months to about 18 months, as manufacturers offer new products with smaller form factors and increased functionality.

PDA

In the consumer market, there are multiple near-term growth prospects. Currently, the SiRFStar II is contained within Research in Motion's BlackBerry 7520, which is used in conjunction with an integrated Nextel service. A European manufacturer has also designed-in the chipset into a PDA. With Research in Motion's legal woes apparantly behind it we feel Sirf may have dodged a bullet in the consumer segment.

Automotive

The automotive market also offers potential. Currently, LG Electronics has several OnStar products that incorporate the SiRFStar II chipset. OnStar announced late last year that GM is planning on building three million vehicles in the 2006 model year with the OnStar product. Several other automobile manufacturers are also considering the incorporation of OnStar products. On January 1, 2005 the German toll-road system officially launched a program in which certain commercial vehicles will utilize a GPS-based system to track and bill for usage. The plan includes 1.8 to 2.0 million trucks, but will increase over time as qualification for inclusion expands.

Growth Estimates

IDC, an industry consulting group, expects wireless handsets to grow from 456 million units in 2002 to over 681 million units in 2006. Additionally, handheld devices and notebook PCs are estimated to increase from 48.5 million units in 2002 to 140 million units in 2006. Gartner, an industry consultant, estimates that 8.7 million GPS-based automotive navigation and telematics systems were sold in 2002 (of 211 million total vehicles sold) and expects this to increase to 16 million in 2005. Another factor driving future growth is the Federal Communications Commission (FCC) mandated E911 regulation, which requires that all wireless carrier networks contain location technology. The network equipment must be deployed by the end of 2005. Germany has deployed a GPS-based system used to tax commercial vehicles for highway usage, and Switzerland is in the process of deploying a similar system.

Wireless network providers have been mandated by the U.S. government under the recent E911 rules to build the necessary infrastructure to provide accurate location awareness capability for GPS-enabled handsets, which should quickly drive GPS pentration into the U.S. handset market.. This is a relatively under-penetrated market, with SIRF's global share at roughly 10% of total handsets incorporating GPS. We expect a broadening of the customer base as more of the leading handset manufacturers adopt the technology.


References

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