Unfazed by rivals such as MTK and Xiaomi, Actions Semiconductor looks set to benefit from tablet industry's growth potential and 64-bit products' thriving market.

A fabless IC manufacturer dedicated to consumer electronics, Actions Semiconductor recently changed its focus to tablets and has achieved success in doing so. Interviewed by ESMC, CEO Zhengyu Zhou shared his opinions on tablets, IoT and wearable devices, and also revealed the future product planning of the company.

Q: Recently, several research institutions have published reports indicating that the growth rate of the tablet market is slowing. Is this change normal?

A: For any kind of product, after several years of high growth, the whole vertical requires a process of digesting and absorbing. Therefore, this year's growth slowdown is a normal situation. It does not need to be taken so seriously.

Our opinion is that this market is still growing quickly, though the market itself will have some short-term adjustments. For instance, more manufacturers are creating strategies for more differentiated and industry-specific applications, rather than manufacturing standard products as they did in the last two years. As a large-screen mobile product, the life of tablets has just begun. There’s still a lot of potential for growth.

Q: Xiaomi has released its tablet; what influence could it have on the current tablet industry?

A: Looking historically at this issue, white box products always occupy the market segment with the fastest growth, the lowest cost and services that are quickest to market. However, eventually there will be more and more brands. Either existing brands go down market, or white box manufacturers transform into brand owners. It is an inevitable trend.

Therefore, Actions does not only operate in the white box space; our targeted customers will be brand customers. Actions Semiconductor itself is a company that values quality, therefore we will definitely address brand owners.

Q: Based on Actions Semiconductor’s current product structure, who is regarded as your biggest competitor?

A: There’s no doubt that MTK MediaTek is our biggest competitor. MTK is a strong competitor, and its achievement in mobile phone field is self-evident.

MTK’s entry into the white box tablet marketing dictates that its large growth and development potential is appealing. It is such a big market that MTK could not occupy it alone. What’s more, the white box tablet market demands “nanny services”; in other words, it demands very personal services.

Highly differentiated and high quality products provide great business opportunities for Actions Semiconductor and other manufacturers which perform well in the Shenzhen market. Actually, Spreadtrum Communications, Inc. and RDA Microelectronics, Inc have proven this, and they will become stronger in competition with MTK.

Q: With a lack of baseband support, how do pure AP manufacturers compete with mobile chip manufacturers like MTK? What are Actions Semiconductor’s advantages?

A: MTK’s biggest advantage in entering this market is its ownership of 2.5G, 2.75G, 3G and 4G baseband chips and technology. Therefore when MTK shows the power of its integrated solution, it will become a very big advantage.

We admit that we fell behind in the 2.5G and 3G market, but we have opportunity in the 4G market. My opinion is that the existence of 2.5G in the tablet market is a special case, which is probably due to some subsidy policies, and is a temporary transitional market. Since there is the problem of Qualcomm’s 3G royalties, 3G is not a good market either. However, we think the transition from 3G to 4G will accelerate.

No matter if they are operators, chip manufacturers or brand merchants, all market participants want 4G to replace 3G. Therefore the battle of 4G has not begun yet, and there are still a lot of opportunities. On this point we do not exclude the possibility of tactical alliance formation, mergers, acquisitions and cooperation in depth, which are all ways to cultivate future 4G products.

So far, in terms of quad-core, our feeling is that we are better than our competitors. The stability and maturity of quad-core APs are better than similar products. More importantly, we have been focused on this market. Whether you talk about customer service or supplying highly integrated, low energy consuming and cost-effective products, we are dedicated to it.

This is the key point that we could win. We have a plan for some cost-effective products to continue supply to the white box market. On the other hand, we will plan and design some products with higher performance and higher specs, such as 64-bit products.

Q: Talking about Actions Semiconductor’s 64-bit processor, will you skip A12/A15 to directly develop the A5X structure?

A:Beginning with the iPhone5, the trend of upgrading from 32-bit to 64-bit on mobile platforms is irreversible, and it will continue very fast. Actions Semiconductor is the first Chinese domestic company with an ARM 64-bit license. We will definitely seize this opportunity to upgrade from 32-bit to 64-bit. While competitors are focused on developing A15/A17structures, we will invest significantly in the development of 64-bit.

We will do our best to be the first company to launch 64-bit products in the tablet vertical. Does that mean we will completely jump over A15/A17? Well, we will still change according to market demand, but 64-bit will definitely be our emphasis. We will provide a series of products other than a single product. Even if we work on the A15/A17, it would just be a superficial trial. We are striving to launch 28nm 64-bit products in the market by the end of this year.

Q: Aside from tablets, in the fields of smart home, wearable devices and car integration, what trends are you optimistic about?

A:Most of our plans are about consumer mobiles and smart home products, and few of our short-term plans are about car integration. We think OTT boxes will become the center of smart homes in the future. Phones and tablets will become the center of mobiles. Actions Semiconductor mainly plans on addressing these two fields. We are not only developing smart boxes and tablets, but also cultivating wearable devices and IoT based on Bluetooth technology.

According to our years of planning and accumulation of technology and marketing expertise, currently we will mainly produce tablets, OTT boxes and Bluetooth speakers. We think Bluetooth 4.0 will be a very important technology in the future, and RF technology such as Bluetooth will be the major direction of Actions Semiconductor’s development in the future.

There are some technology barriers for car integration, and it will take a long time to enter this field. I personally think car integration is a good direction. In the future, we will be interested in the auto after market.

Q: Recently, the OTT box has become very popular; could you talk about Actions Semiconductor’s plans in this market?

A: The ATM7029 is our first product for the OTT box market, and it has a very simple feature set. It uses one chip set that integrates internet, power management, display, audio and other functions, and is a very stable and cost-effective product. So far, we have already had plenty of brands’ support, such as Kaiboer, Inventronics and Bianfeng Network.

These brands’ sales are increasing, and their recent sales reach the scale of tens of thousands. In the future, we will launch the ATM7039C and ATM7039H. They are more focused on boxes. They have a powerful GPU that supports H.265 decoding. We will also launch 64-bit boxes, supporting 4K 60 fps decoding. The ATM7039C will be released in this quarter and the ATM7039H is planned to be released in Q3 or Q4.

Q: Actions Semiconductor has released a 32-bit MCU; could you talk about its product positioning?

A: Our positioning for this MCU is for strong media functions. It is an open platform mainly offered for advertising devices and learning products. In the future, there will be MCUs with Bluetooth targeted at IoT. In our current plans for tablet SoCs, we would like to develop an open platform as a major development direction. We will offer some open platform SDKs, including some plans for I/O extensions and packaging.

These operations are all in full swing. I believe that in the coming two to three months, Actions Semiconductor’s open platform will be formally introduced into the market. As an opening platform, Actions Semiconductor will build an ecosystem based on our own platform in order to form a full-service system.