By Bruce Gain EBN (09/03/2002 9:52 AM EST)

Conexant Systems Inc., Newport Beach, Calif. has confirmed reports that it has shuttered development of new Bluetooth products in a move one analyst said foreshadows the withdrawal of other Bluetooth players.

According to a Conexant spokeswoman, "Conexant has suspended its Bluetooth development for the time being. Like many companies, we are redeploying resources to focus on core product areas," she said. "We certainly still think Bluetooth is a promising technology and will work from there."

Conexant's decision represents overcapacity in the Bluetooth IC supplier base, said Jack Quinn, an analyst for Micrologic Research, Phoenix, Ariz. "There are far too many players. There is obviously going to be a shakeout," he said. "We need to get to a fraction of the supplier base that we have now. I expect 80% of all suppliers will get out of the business during the next couple of years."

According to the Bluetooth Special Interest Group (SIG), an association devoted to Bluetooth commercialization issues, there are now over a hundred IC components that meet the SIG standard. That number does not take into account an unspecified army of other suppliers that are either developing Bluetooth ICs or have products with SIG status pending.

For all existing Bluetooth IC suppliers, the pie in question is small, Quinn said. "We saw 10 million chips shipped last year and that is a small market," he said. "That is a great number when you see how much it has grown, but even when the market will have hundreds of millions of chips shipping, [there still will not be enough demand] to support everybody. It will be years before it is a sizable market."

Conexant, a large and well-known communications IC vendor, had not indicated that it was thinking of discontinuing its steady stream of new Bluetooth products, Quinn said. "I'm surprised to see a big company like Conexant with all their resources be one of the first players to make this decision," Quinn said.

Conexant, Newport Beach, Calif., received certification for its CX72303 Bluetooth radio solution by the Bluetooth SIG last year. The CX72303 is offered as a stand-alone component and as part of Conexant's two-chip solution that also includes its CX81400 baseband processor and link manager, both of which have also received Bluetooth certification.

The Conexant Bluetooth family includes an RF transceiver that offers 2.4GHz, frequency-hopping and spread-spectrum radios optimized for use with Bluetooth technology-based systems. The devices are designed to meet Bluetooth Class 2 and Class 3 specifications and enable an operating range greater than 10 meters.

The Bluetooth RF Transceiver devices are fabricated using a silicon germanium (SiGe) BiCMOS process, and housed in 48-pin packages. The CX72303 is version 1.1 compliant and is optimized for use in 3G and GSM based systems, while the CX72304 is suited for CDMA handsets. Pricing was not disclosed.

According to the Gartner Group, London, over 40 million Bluetooth end-use devices will ship this year, after 10 million Bluetooth products were shipped in 2001.