Device Market ‘Big’ Enough For MHL and Its Rivals, Silicon Image Says

Silicon Image upped its forecast for Mobile High-Definition Link (MHL) chip shipments again for 2012, to 140 million from the 120 million predicted last quarter and the 100 million projected in January, CEO Camillo Martino said on the company’s Q3 earnings call. The momentum is being driven by smartphones and tablets, Martino said, but the company reported a growing number of TVs, AV receivers, pico projectors and “other displays” with MHL chips from manufacturers including Acer, Best Buy’s Insignia brand, LG, Philips, Samsung, Sharp, Sony and Toshiba.

Samsung alone shipped 56 million smartphones in Q3, Martino noted, with Silicon Image’s share at about 45 percent. Other MHL customers include LG, Huawei, HTC and ZTE, which are shipping in “quite substantial volume,” Martino said. LG is a customer on the phone side, and “we expect that relationship to blossom into the TV side” next year, he said, calling LG “a very good customer for us.” For 2012, the number of TVs with MHL is roughly 10 percent, Martino said, adding that the percentage could rise to a third in 2013, either as “a discrete component or an SoC (system on a chip)” and to half of all TVs shipped in 2014.

New categories are also helping to drive growth, Martino said, citing Roku’s MHL-enabled Streaming Stick that provides smart TV functionality to MHL-enabled TVs and displays without the need for a separate remote control or power supply. He also cited 3M’s recently launched Streaming Projector, which integrates Roku’s Streaming Stick. Going into 2013, Silicon Image expects the number and variety of MHL-enabled TVs, projectors and other displays to “continue to grow as the MHL standard advances.” CE remains one of Silicon Image’s “key strategic markets” and is important for driving the expansion of MHL and the growth of the company’s mobile business, Martino said.

Silicon Image’s MHL and InstaPrevue technologies are gaining traction in the home theater segment, Martino said, where the latter shows a thumbnail of what’s showing on connected inputs so consumers don’t have to remember which device is plugged into which input. At the CEATEC Japan show last month, several manufacturers showed home theater products with MHL and InstaPrevue, he noted. Martino also reiterated company plans to have Ultra HD video processors capable of 4K upscaling in AV receivers and Blu-ray players in first half 2013 (CED Oct 4 p1).

Silicon Image has “a number of different chips” that serve different segments of the market, Martino said. One type is for high-end, feature-rich phones and others are targeted to the mid-range market, he said. Among the smartphones and tablets incorporating MHL technology are Samsung’s Galaxy S3, the Asus PadFone 2 and TCL’s mid-range S800 smartphone, which sells unlocked in China for around $200, Martino said. Korea Telecom’s MHL-equipped Spider Laptop accessory becomes an “ultra-portable smartphone powered laptop” when connected to a Samsung Galaxy S3, he said.

When asked about Google’s announcement Tuesday of the Nexus 4 smartphone with the competing DisplayPort technology, Martino said the overall device market “is big,” citing 600 million smartphones, growing to 750 million to 800 million next year, 250 million TVs, 100 million PC monitors along with cable adapters. “We still expect to grow,” he said.

WirelessHD technology is on track with the product roadmap, Martino said, noting Sharp’s VR-WH1 wireless adaptor can connect up to four devices, including MHL-enabled smartphones, to HD displays. Other WirelessHD products are available from Dell Alienware, Epson, ZyXEL and DVDO, he said. The company launched an “approved module” program in August for its Gen 3 product, which provides companies a 60-GHz design certification and regulatory package to accelerate time to market, Martino said. Four companies have joined the program so far, with the mobile market expected to offer the most significant opportunity for the technology, he said.

Silicon Image’s two-chipset wireless mobile solution is “on track,” Chief Financial Officer Noland Granberry said, and is expected to be sampling by the end of the year. The chipset will be shown both at CES and Mobile World Congress early next year, with resulting revenue expected to be realized in the back half of 2013, he said. The following year “should be a breakout year for the wireless technology,” Granberry said.

The company’s Q4 outlook reflects a seasonal decline of 9-14 percent that’s “higher than our typical 5-10 percent,” Granberry said, while Q1 2013 revenues are forecast to be “flat to modestly up.” The outlook is based on three factors, he said, including a tapering off in the PC market, “our CE business being down more than we would seasonally expect” and an acceleration of product transitions to new models earlier than in the past that’s resulted in a shift of order patterns to Q1, he said.

Silicon Image shipped 62 million units during the quarter, up from 48 million units in Q2, Martino said. Revenue of $73.9 million was up 16 percent sequentially and 24 percent over Q3 2011, he said, which was “above our seasonal pattern” and due to “increasing traction” of MHL-enabled mobile devices.