Huge Market Awaits As World Goes Digital

Electronic News, Nov 30, 1998 by David Tahmassebi

VLSI Technology

SAN JOSE--The U.S. government-mandated transition from analog-to-digital TV broadcasting that will occur over the next decade virtually guarantees that a huge market will develop for ICs for digital TV set-top boxes, video components and TVs themselves. The U.S. isn't the only country phasing out analog broadcasting, as much of Europe is also migrating to digital. Even in markets where government action is not as forceful, the signal quality, bandwidth efficiency and interactivity of digital TV make it an economically compelling technology. Clearly, the whole world is going digital and will drive a boom market for digital TV silicon.

Despite guaranteed high growth prospects for digital TV ICs, successfully participating in this market is not going to be easy. There are several reasons for this.

Gate counts for a complete digital TV applications (signal interface, data transport, data decompression, A/V output encoding) are typically a million-gates for a basic, no frills solution. Intellectual property required entails embedded microprocessors, DSPs, and specialized blocks for A/D, D/A demodulators, audio and video MPEG decoders, descramblers,2-D graphics, and video encoders. If you add features like Internet access, return channel modem, conditional access and sophisticated user interfaces, the technology becomes even more challenging.

IC manufacturers will have to provide very sophisticated ICs at prices that enable their OEM customers to deliver end products at affordable consumer costs. At the moment, the general public seems intrigued by digital broadcasting, but is not willing to pay more than a few hundred dollars for a digital satellite or cable receiver. Based on their experience with other electronic goods such as color TVs, VCRs, CD players and PCs, they expect that prices will come down sharply over the next couple of years.

Silicon solutions must also be flexible to cope with a complex matrix of digital TV delivery modes (cable, satellite, terrestrial); national and regional technical standards, and emerging technologies (interactivity, cable modem, cable telephony, etc.). Digital TV is a global trend, but it will probably never be a global market. Every country and TV service will present a unique set of requirements. Meeting these requirements while maintaining an efficient product development program can be a major headache for OEMs. The ideal situation will be for OEMs to work with as few IC suppliers as possible--ideally a single point of supply for all digital TV silicon--and still be able to project products into specific markets. The IC supplier will not only have a broad product line, but also the flexibility to spin product variations to meet specific requirements. Again, focused, flexible players will have an advantage.

Digital IC solutions must help end product manufacturers to get products to market fast. The key to time-to-market lies in a "complete solutions" mentality on the part of IC vendors. IC companies will need to bundle product lines with systems software, development platforms and field applications engineering services that will enable customers to introduce end products for a targeted service fast, without spending many man/years on porting software to the IC vendor's solution.

Recipe for Success

What kind of supplier can meet these requirements and still generate the profits that justify participating in this market to investors? The profile of a successful digital TV IC market player will include:

Deep libraries of digital TV-focused on-chip IP. This will include collections of blocks and cores directly relevant to digital TV functionality (MPEG-2 video decoding, MPEG and AC-3 audio decoding, PAL/NTSC/SECAM encoding, etc.) as well as more general purpose items such as RISC processor cores, DSPs descramblers, embedded memory, smart cards, IEEE 1394, Ethernet, and USB interfaces, and so on. IP should be fully reusable, customizable and optimized for cost effective integration with process technology.

Ability to deliver cost-effective, custom solutions. Successful vendors will deliver differentiating features through deeply ingrained ASIC capabilities and the ability to enable customers to create differentiated retail products in an expedient and cost-effective fashion.

Systems expertise and solid relationships with digital TV service providers and standards-setting groups, customers and software vendors. Successful IC vendors realize they are selling more than chips: they are providing silicon that gives customers access to market opportunities defined by standards bodies and service providers. Similarly, the successful vendor will see their task as creating the kinds of relationships that enable customers to navigate through unique and often challenging specifications from digital television service providers.

High velocity time-to-market design cycles. This will result from aggressive deployment and efficient use of high-productivity design methodologies. Not all IC companies use the same tools and techniques in the circuit development process. Some have "secret sauce" that can make the difference between getting a winning product into showrooms first and having a project canceled because market conditions changed in mid-development.