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Sony bolsters imaging and IoT efforts with Altair acquisition

Like Samsung, Sony has been trying to offset the squeeze on its TV and handset businesses, by increasing its revenues from advanced components for mobile and IoT devices. Last year, it set up a division dedicated to sensors, mainly for imaging, and acquired Toshiba’s activities in that area for $155m. And in October, Sony acquired Softkinetic Systems, a Belgian developer of range image sensor technology, which uses the ‘time of flight’ method for calculating distance of an object.

Now it will pay another $212m to expand its IoT platform further, buying 4G modem specialist Altair Semiconductor of Israel.

Sony will gain a series of low power modem chips which are targeted at embedded devices – especially the emerging LTE-M standard for machine-to-machine connectivity. This will enable it to target that sector directly, at the point when LTE-based IoT is poised to go mainstream on the back of 3GPP ratifications – LTE-M and the network-side NB-IoT. However, in the rat race which is the mobile modem game, it may be more important to Sony to integrate the Altair chips with its image sensors in order to create more differentiated packages and reference designs, for specific IoT applications where the Japanese firm will have a strong advantage.

Commenting on the deal, Sony said it plans to initiate R&D in new platforms which will combine its image sensing chips and software with Altair’s offerings, to create “a new breed of cellular-connected, sensing component devices”. In the bid to make connected devices ever more economical in power, size and cost, tight integration of components is important and could be addressed by Sony’s combinations. As seen in the GSM market, where modems have been integrated with sensors by companies like Cypress, this can also simplify the acquisition and transmission of the data the sensors collect.

Sony supplies CMOS smartphone imaging chips to Apple and Samsung, as well as low cost handset makers Xiaomi and MicroMAX, and is the market leader with about 40% share of the $8.7bn pie. It is pushing this expertise into other devices, such as gaming consoles and wearables, too, as the sector looks set to grow sharply to about $12bn by 2019.

The firm is targeting a revenue increase of 62% by 2018, which would bring in ¥1.5 trillion. Acquiring Toshiba’s unit is expected to add about 100,000 units a month and up to ¥70bn in additional sales, according to estimates by SMBC Nikko Securities. Toshiba supplies CMOS image sensors to Microsoft, HTC, LG and Nikon, among others.

Both the Toshiba and Altair acquisitions are part of Sony president Kazuo Hirai’s radical, if belated, turnaround plan, which has sparked rumors that he will pull out of the smartphone business, where Sony continues to make losses. In recent quarters, its financial bright spots have mainly related to components and displays. In its fiscal Q2, to September 2015, for instance, it returned to Q2 profit, with gaming and image sensors being the stars of the show. Operating income at the semiconductor division rose by 15% and revenue by 7.4%, while profits from cameras were up 29%.

Altair was founded in Israel in 2005 by former Texas Instruments engineers Oded Melamed and Yigal Bitran, who had previously been executives in Libit Signal Processing, which TI acquired in 1999. Altair has raised about $134m over the past decade from venture capital firms including SanDisk Ventures, Bessemer Venture Partners, BRM Capital, ETV Capital, Giza Venture Capital, Jerusalem Venture Partners, Jerusalem Global Ventures and Pacific Technology Partners. Local reports indicate it has about $45m in revenues and that Sony will retain its team and use its base in Israel as an R&D center.

Along with another standalone 4G modem maker, Sequans of France, Altair came to prominence in the WiMAX market. When that technology failed to fulfil its potential, both these companies harnessed their expertise to move into TD-LTE, avoiding Qualcomm’s multimode baseband and SoC territory in order to focus on the LTE-only modem opportunity. This was confined to a relatively small number of devices, such as 4G tablets and home access gear, at first, but with the shift of the M2M market towards mobile broadband, the potential has become huge. Sequans and Altair have been involved in high profile operator trials and deployments, and have taken an early position in the emerging market for ultra-low power embedded LTE.

This has been based so far around Category 1, a once-neglected 3GPP standard which was revived to address the need for low power, low cost M2M devices. A successor specification, Category 0, has been taken off the official agenda because of the accelerated move towards Cat-M, part of 3GPP Release 13, which will target data rates of 100-200kBps at very low power, and initial costs below $10. Altair and Sequans have both recently engaged with Ericsson in trials of Cat-1 chips with Power Saving Mode, a valuable bridging technology ahead of Cat-M and Release 13.

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