Sigma Designs Targeting $500 Million in Annual Sales by 2015

Sigma Designs will increase sales 12 percent annually through 2015 en route to $500 million in revenue, driven by new business in cable and satellite set-top boxes, Chief Financial Officer Thomas Gay said at company investor conference in New York.

Sigma gets substantial revenue from selling media processors for IPTV set-tops to customers including AT&T and Deutsche Telekom. The company is banking on expansion into satellite and cable markets dominated by Broadcom and STMicroelectronics. It expects to start generating revenue from satellite and cable in the second half of the year with its new SMP8910 processors, which have been sampling with customers and which increase clock speed to 1 GHz from 667 MHz, on top of its SMP8650 business.

The 3D-capable SMP8910, which starts volume production in Q3, caps a year-long effort to integrate VXP technology into a single IC (CED Jan 25 p2). The 8910 strips out the decoding used in the SMP8644 used in Blu-ray players and replaces it with VXP’s scaling, noise reduction and deinterlacing technology. The chip can support Skype and over-the-top content at the same time and it decodes H.264, RealD, Sensio, MVC and TDVision. The SMP8670 won’t have VXP technology, but it adds HDMI and runs 40 percent faster than the IC it’s replacing, the SMP8652, said Michael Weissman, vice president of marketing. It will be about half the price of the SMP8910 and is designed for Blu-ray players and connected media devices, he told us.

Since introducing the SMP8910, Sigma has had “very fruitful discussions” with MSOs and it’s weighing field trials with about a half-dozen MSOs, Weissman said. The VXP technology incorporated in the 8910 produced about $50 million in revenue in 2010 across front projectors, medical imaging and, best-selling of all, videoconferencing, Weissman said. Sigma will continue to market standalone VXP processors, but the technology will be deployed “broadly” across the company’s product line, he said. “It will be a broadly integrated technology, but in the most price-sensitive markets it won’t” be added to ICs, Weissman said.

The company is shooting for revenue from processors for hybrid STBs combining IPTV with terrestrial and satellite services, Gay said. Sigma expects to secure design wins in the hybrid segment late this year, with products containing its chips shipping in 2012, he said. “The telcos are wanting to add broadcast and the broadcasters are wanting to add IP” services, creating a ready market for hybrid STBs, he said. “Broadcast is the easy side” of developing the hybrid ICs, and the hardest part is building the software to do the IP,” because it’s more complex.

"Satellite and cable will show a lot of growth" as the industry moves toward a “IP-centric network in the home,” said Kenneth Lowe, vice president of strategic marketing at Sigma. Among the company’s largest customers is Motorola, which accounted for 23 percent ($16 million) of fiscal 2010 annual revenue of $286.9 million and which supplies STBs to AT&T and others. Sales to Gemtek, which provides STBs for Korea Telecom and others, represented 21 percent ($15.2 million) of annual revenue. IPTV processors were 44 percent ($31.3 million) of annual sales. Among the telcos said to weighing using the SMP8910 is AT&T, which is readying a second-generation Motorola-built STB for its U-verse network.

Sigma also is aiming to increase its home connectivity business, using Z-Wave technology it acquired in buying Zensys. Best Buy has been testing sales of Jasco Products’ GE and Schlage Z-Wave-based wireless lighting on-off controls, keypads and brass lever door handles in 20-30 stores in Dallas and Los Angeles. And Verizon is selling home-monitoring kits containing two, six and eight Z-Wave devices with a monthly service fee under $10. Verizon’s home control products are expected to be available by June, said officials of the carrier. The products use Sigma’s ZM3101 and ZM3102 Z-Wave transmitter and receiver modules, many of which have been included in the 450 Z-Wave products introduced so far. Sigma also carries the ZM4101 and ZM4102, which adds integrated IR and uses the 700 MHz frequency versus the 908.42 MHz employed by the ZM3101-ZM3102, Weismann said. The ITU recently launched a project to study Z-Wave and consider adopting it as a standard, he said.

Meanwhile, Sigma expects to start sampling the CG5110 home networking chip in late Q2 with a goal of having it available for bridge devices late this year. The chipset, the digital portion of which will be built using a 40-nanometer process, supports four wired home networking standards and is among the first available based on the ITU’s G.hn standard. G.hn covers transmission of high-speed data over coax and phone lines and is compatible with the HomePlug AV standard set by the HomePlug Powerline Alliance. Standalone products are expected to incorporate the chipset by late 2012, Sigma officials said. The chipset incorporates Sigma’s ClearPath technology, designed to use phase, neutral and ground lines on a powerline as independent channels that avoid noise and attenuation. ClearPath is designed to eventually increase data efficiency to 99 percent at 50 Mbps from 60 percent.

Sigma’s HomePlug AV 2110 chipset has shipped “hundreds to thousands” of samples and is in field trials with 10 service providers to deliver high-speed data over powerlines. Retail products containing the chip are expected to ship in the second half, many of them built by original design manufacturers Gigafast and Comtrends, Weissman said. HomePlug is used in addition to the HomePNA technology that Sigma develops for delivering high-speed data over coax and phone lines. STB manufacturer Pace recently joined the HomePNA board and the technology is deployed with 40 service providers, including AT&T. HomePNA operates at speeds up to 200 Mbps. Sigma continues to offer its Coair ultra-wideband chipset for “very specific” applications but isn’t widely deploying it, Weissman said.