chipper move

Following Google, Apple, Infineon plugs into smart speaker boom

High-tech Sensor And Semiconductor Manufacture At Infineon Technologies AG Factory And Clean Rooms
Sensors and sensibility. Source: Bloomberg

Digital assistants are hot, but they only understand half of what they are told, for example if they can’t place an accent, or several people are talking at once. If the TV is running in the background, forget it.

Infineon is trying to help. Germany’s biggest chipmaker plans to ride the boom in intelligent speakers like Amazon Echo or Google Home which are expected to see sales growth of 30 to 50 percent per year.

Infineon already supplies the US internet giants with core components for the modern voice-activated assistants. It will present a new system at next week’s Mobile World Congress in Barcelona that will make the speakers better at discerning when they’re being spoken to.

Current voice assistants only get 50 percent of all that they hear, Andreas Urschitz, head of Infineon’s Power Management & Multimarket division, told Handelsblatt. It’s especially difficult for them when there are several people in the room, but he said with Infineon’s new system, it will no longer be necessary for people to utter key words like “Alexa” to wake up Amazon’s smart speaker.

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The current speakers can be entertainingly unreliable. There are examples of misunderstandings such as Amazon Echo trying to order dollhouses after a US TV program contained the fatal words “Alexa ordered me a dollhouse.” Echo devices placed near TVs responded to the phrase, but did not actually place orders, unless someone confirmed them by saying “Yes.”

Infineon’s microchips enable the speakers to understand voice commands. The company is using a combination of radar chips and microphones to allow systems to identify where a command is coming from. The current phones just respond to the loudest sound. But Infineon’s radar chips determine the location of the person speaking. Using that information, the microphone can pinpoint the person and follow him or her around if they are moving.

“The better the gadgets work, the more they will be used,” Mr. Urschitz told Handelsblatt. The outlook is good: Market research firm IHS predicts that global sales of intelligent speakers will reach 39 million units this year. That’s not a lot compared with the 1.4 billion smartphones sold last year, but it is a 50 percent rise from 2017. Amazon and Google dominate the market, with Amazon well in the lead for now.

The wave is only just beginning, according to IHS analyst Paul Erickson. Competition will pick up this year, with millions of households buying units and many companies launching speakers compatible with the Amazon and Google systems, giving customers greater choice of price, design and quality, he said.

The market may still be small, but Infineon wants to get into it because it offers the momentum needed to deliver the 8 percent annual average growth CEO Reinhard Ploss has promised investors.

That won’t be possible without new customers because most of the industries Infineon supplies to aren’t growing particularly strongly. Smartphone makers, the company’s most important customers, last year increased their sales by just 3 percent. Smart speakers are one new growth market. Robots and drones are two others.

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The smart speakers are just the beginning, said IHS. In the near future, billions of electrical appliances like televisions, thermostats or garage doors will be activated by voice.

Infineon is working to combine a variety of sensors to replicate all the human senses. A temperature and gas sensor can replace a smoke alarm, for example. “If an appliance can hear, smell, see and feel, it can register things that usually only humans can recognise,” said Mr. Urschitz.

According to analysts at Loup Ventures, Amazon, Google and Apple will dominate the smart speaker market in the coming years. Infineon doesn’t name its customers but it’s no secret that it supplies components to all three of them. Loup expects Google to overtake Amazon by 2022 and to clinch around half the market, with Amazon holding on to more than a third and Apple having 12 percent.

That doesn’t matter to Infineon as long as it keeps supplying all of them. But the market won’t be confined to the big three. Infineon could also supply other brands of speakers based on the software of Amazon, Google or Apple.

Speaker manufacturer Sonos has already integrated Amazon’s Alexa system. And Infineon is certified by Amazon, which sounds pretty good – even to Alexa.

Sha Hua is Handelsblatt’s China correspondent, based in Beijing. Joachim Hofer is Handelsblatt’s corresoindent in Munich. To contact the authors: s.hua@handelsblattgroup.com, j.hofer@handelsblattgroup.com

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