February 6, 2013 / 11:16 AM / 5 years ago

DSP Group goes after mobile market with noise reduction chip

* New chip to compete with Audience, Cirrus Logic

* Expected to be significant addition to DSP revenue in 2014

* Markets for chip include mobile, smart TVs, PCs, autos

By Tova Cohen

HERZLIYA, Israel, Feb 6 (Reuters) - Israeli multimedia chip designer DSP Group will compete head-on with audio technology heavyweights Audience Inc and Cirrus Logic Inc when it launches its first chip designed for mobile phones at the end of the month.

It expects the new HD Clear noise reduction chip to help it build its mobile sector business to account for a third of its revenue within three years.

The technology will enable people to use their cell phones for conversation in any condition, whether in a car, on a train or in a noisy club, DSP said. It will also facilitate the use of speech recognition and voice commands by eliminating background noise.

Samsung Electronics uses noise-filtering technology from California-based Audience while Apple uses audio chips from Cirrus Logic in its iPhone. Audience’s technology is used in two prior generations of the iPhone, but not in the iPhone 5.

DSP said its chip, at 3x3 mm, is nearly 20 percent smaller than the most advanced comparative chip on the market.

“We will be the smallest and most efficient chip in the market,” chief executive Ofer Elyakim told Reuters in an interview, adding the technology will allow only the speaker to be heard in a room with noise.

“We are the only company that has technology to cancel noise when using speaker phone, in a hands-free mode,” he added, noting the other technologies can only be used in normal conversation mode.

Research firm IDC estimates that 63 percent of all mobile units will have technology to eliminate background noise by 2015, or about 1.7 billion units, up from 500 million in 2012.

Elyakim, who estimates each unit sold is worth $1, expects DSP Group to become a major player in this market.

“I expect our revenue growth not to look different than that of Audience,” Elyakim said.

Audience last week posted fourth quarter revenue of $38.7 million, up from $18.0 million a year earlier.

“We expect this chip to be a significant addition to our top line in 2014. There could be some contribution in late 2013,” Elyakim said.

He said he would be surprised if the company did not obtain $30 million in sales from the chip in 2014.

DSP expects noise elimination technology to be increasingly integrated in mid-range smartphones and feature phones and not just the most expensive devices. Other addressable markets for the chip include smart TVs, game consoles, personal computers and automobiles.

Until now DSP Group has focused its efforts on providing wireless chips for cordless DECT phones used in homes, where it has a 70 percent market share. It recently branched out into voice over Internet protocol for office phones, where it is No. 3 after Texas Instruments and Broadcom.

“According to our long-term model, home, office and mobile should each account for a third of sales,” Elyakim said.

The company earned $775,000 excluding one-off items on revenue of nearly $163 million in 2012.

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