Conexant Modem Chip Fails to Get OK
For the second time in six months, Conexant Systems Inc.’s much-touted cable modem blueprint failed to get certified this week by an industry standards group.
The failure again forces the Newport Beach modem chip maker to wait, possibly for several more months, before it can roll its chips out into the U.S. market--and gives cross-town rival Broadcom Corp. of Irvine a key advantage in the booming market for communication chips used inside high-speed Internet devices.
The setback, while clearly a disappointment for the industry’s leading chip maker for dial-up telephone modems, does not come as a complete surprise. At the company’s first shareholders meeting last month, Conexant Chief Executive Dwight Decker warned investors that getting certified would be difficult.
Company officials could not be reached for comment late Friday. The next testing opportunity should begin soon.
Industry analysts note that no technology company has ever received such a certification on its first try, and it can often take companies several attempts.
Without a stamp of approval from Cable Television Laboratories, modem manufacturers won’t use Conexant’s technical designs in products aimed at the U.S. market, analysts said. And that’s a key battleground right now, given the public’s demand for high-speed Internet access.
To convince consumers that cable modems won’t face the same fate as the VHS-vs.-Beta VCR fiasco, the cable industry has spent several years standardizing equipment so people can use the same store-bought modem or cable set-top box no matter where they live or what cable company provides their service.
Broadcom has dominated this market to date. It was the first with a full chip-set for these modems--as well as several complete technology reference designs for cable modems and other related devices--that met the standards set by CableLabs.
That edge has helped the company seal a slew of deals to supply chips to manufacturers, including General Instrument Corp. and Motorola Corp.
Conexant’s shares lost $6 Friday, closing at $88.06 on Nasdaq trading. Broadcom’s rose $4.06, to $243.06 a share.
