ON Semiconductor to Acquire Wi-Fi Chipset Vendor Quantenna

ON Semiconductor, provider of power management, sensors, logic, timing, and low power wireless connectivity solutions, recently announced that it is set to acquire Wi-Fi chipset vendor Quantenna Communications. Quantenna’s portfolio consists of high-performance Wi-Fi solutions and is often early to market on new Wi-Fi standards and higher end chipset configurations for networking devices.

The strategic rationale for the move is threefold:

Firstly, the combination of ON’s existing expertise within power management and Bluetooth technologies with Quantenna’s innovative Wi-Fi hardware and software portfolio can help create a strong platform that can effectively address the wireless connectivity market for the industrial Internet of Things (IoT). The addition of Quantenna’s Wi-Fi portfolio will also complement ON’s existing suite of low-power connectivity solutions that include Bluetooth, 802.15.4, SigFox, and sub-1GHz technologies within this space. Beyond industrial, a further reason for the acquisition was to enable ON to better target automotive applications. Part of ON’s existing connectivity portfolio includes ultra-low-power automotive grade Bluetooth SoCs such as NCV-RSL10 targeting applications like keyless entry and infotainment control. It is feasible that the acquisition could allow ON to more effectively target other automotive applications within the infotainment space, and perhaps eventually lead to the creation of Bluetooth and Wi-Fi combo chips for in-vehicle applications. The combined strengths of the two companies could therefore help provide a much stronger automotive and industrial platform, while ON’s existing sales reach and distribution presence within these markets could allow these combined solutions to be leveraged and scaled more effectively.

Secondly, ON Semiconductor and Quantenna have complementary markets with minimal customer base overlap. As a result, ON believes the acquisition could add a potential Serviceable Available Market (SAM) opportunity of US$2 billion in 2018 growing to US$4.3 billion by 2022.

Thirdly, the market for premium Wi-Fi products will continue to grow rapidly in the coming years as a result of increasing Over-the-Top (OTT) and cloud video content, higher resolution streaming, low latency gaming, and other high-performance requirements. Increasingly, Wi-Fi is being viewed as a network bottleneck, and customers are becoming more demanding than ever for faster and more reliable performance throughout the home and other markets. This will lead to strong growth in higher end Wi-Fi 6 networking solutions and Multiple Access Points, or multi-AP, systems in the coming years. Quantenna’s high performance, Wi-Fi 6, and multi-AP solutions are therefore well placed to take advantage of these increasing demands in the coming years, while ON’s larger scale and sales reach will allow Quantenna to continue innovating while accelerating and growing Quantenna’s existing business to a new level.

The timing of the acquisition is made all the more interesting due to the anticipated growth in Wi-Fi 6 solutions throughout the next few years. By 2024, ABI Research expects 802.11ax solutions will account for 40% of all Wi-Fi chipset shipments, and Quantenna is already heavily innovating in this space. In addition, Quantenna’s focus on high-end solutions is also advantageous, with 4X4 and 8X8 Wi-Fi chipset configurations anticipated to grow by 20% and 32% respectively between 2019 and 2024. In Q4 2018, Quantenna posted record revenue from their premium Wave 3 10G and more mainstream Wave 2 product segments, demonstrating growing demand for high-performance Wi-Fi solutions. In addition, 2018 represented record revenue of US$220.5 million, equating to 25% Year-over-Year (YOY) growth when compared to 2017, further highlighting the demand for premium Wi-Fi solutions. Quantenna is also likely to be able to take advantage of the arrival of 6GHz Wi-Fi over the next few years, and its acquisition by ON Semiconductor could help propel the company to scale 6GHz much further than it could by itself.

Alongside this, some Wi-Fi chipset vendors are also beginning to promote new enhancements in the 2.4GHz band to be included in the upcoming 802.11ax protocol. These will also enable 2.4GHz Wi-Fi to better target IoT applications in the future. For example, 802.11ax will support Target Wake Time (TWT), reducing the amount of time devices need to wake up by negotiating and defining specific times for a station to access the medium. This allows the station to sleep for longer periods of time, which reduces power consumption, and helps to reduce overlaps between different stations trying to access the medium. 802.11ax also supports 2MHz channels, several of which can be left blank. This improves coexistence with other 2.4GHz IoT radio technologies such as Bluetooth or 802.15.4. These 2MHz channels can also enable much simpler client designs with support for lower data rates and longer battery life. Support for Orthogonal Frequency-Division Multiple Access (OFDMA) will also divide the radio channel into multiple smaller sub-channels, each with slightly different frequencies. These narrower channels are then used to transmit data to multiple users at the same time. This helps reduce frequency fading and interference, resulting in increased throughput and more efficient use of the spectrum. Intellectual Property (IP) providers such as CEVA are already promoting low-power features of 802.11ax through their RivieraWaves RX-AX low-power platform, a 20MHz solution for small, low-power IoT devices and wearables, as a replacement to 802.11n. Quantenna’s single band 2.4GHz portfolio could therefore greatly complement ON Semiconductor’s focus on low-power connectivity within industrial applications.

Ultimately, the move could help make ON Semiconductor an industry leading industrial, automotive, and service provider connectivity provider while helping scale Quantenna’s innovative Wi-Fi portfolio further than ever before.