Broadcom Rolls Out Near-Field Chips as It Targets NXP, Samsung

By Olga Kharif - Sep 26, 2011 9:06 PM GMT+0700

Broadcom Corp. said today that it’s introducing a new line of near-field communication chips, which can turn smartphones and consumer electronics into mobile wallets.

The semiconductors are 90 percent more energy-efficient and 40 percent smaller than competing products, Broadcom Vice President Craig Ochikubo said in an interview. They’re already being designed into products by several Broadcom customers, and the first of these will debut by mid-2012, he said. The chips will let consumers tap their smartphones on store cash registers to pay for goods and redeem coupons.

Ochikubo wouldn’t name the manufacturers using the chips, though Irvine, California-based Broadcom has supplied components to companies such as Apple Inc., Hewlett-Packard Co. and Dell Inc. Apple has considered putting near-field communication, or NFC, chips into its products.

“What makes Broadcom unique in this market is we are coming into it with a connectivity portfolio,” Ochikubo said. “NFC is poised to become standard in smartphones. There will be companies next year that buy our complete package.”

Broadcom plans eventually to sell complete packages of chips, including NFC, global positioning, Bluetooth and other capabilities, Ochikubo said.

Broadcom’s new offerings could heat up competition with near-field chipmakers such as NXP Semiconductors NV, Samsung Electronics Co. and Inside Secure.

‘Competitive Pressure’

“Broadcom can bring breadth and heft to this industry,” Mark Hung, a research director at Gartner Inc., said in an interview. “It’s going to present significant competitive pressure.” Broadcom could grab 20 percent of the near-field chip market within a year, he said.

Broadcom’s move is also a sign of growth in the market for near-field chips and devices that use them. The value of mobile payments made with such technologies worldwide will more than double to $670 billion by 2015 from $240 billion this year, according to Juniper Research.

The U.S. market’s growth is driven by Google Inc.’s recent debut of its mobile wallet service and by wireless carriers’ efforts to bring near-field payments and promotions into select cities next year.

Broadcom has offered less-capable NFC chips, which are not suited to smartphones, in the past. Last year, it acquired NFC chipmaker Innovision Research & Technology Plc for $47.5 million. The new chips are the result of combining Innovision’s and Broadcom’s technologies, Ochikubo said.

Broadcom dropped 71 cents, or 2.1 percent, to $33.82 at 10:05 a.m. on the Nasdaq Stock Market. The shares had fallen 21 percent this year before today.

To contact the reporter on this story: Olga Kharif in Portland, Oregon, at okharif@bloomberg.net.

To contact the editor responsible for this story: Thomas Giles at tgiles5@bloomberg.net