DSP Group Buys SoundChip for ANC Expertise

Fabless semiconductor company DSP Group has acquired SoundChip, the Swiss electroacoustic engineering firm with significant active noise cancellation (ANC) expertise, for $14.5 million.

While DSP Group has been creating SoCs for voice applications for decades, particularly for cordless phones, this move marks the company’s entry into the rapidly growing wireless earbud sector.

The combination of DSP Group’s SmartVoice technology, which includes algorithms and codecs as well as voice SoCs, and SoundChip’s active noise cancellation technology is already found in Google’s Pixel Buds 2, and ANC-enabled true wireless stereo headsets from Technics and Panasonic.

Cordless telephony
DSP Group has been making SoCs for cordless phones since the 1980s and this sector still makes up 38% of revenue, though this market is steadily declining. The company is also active in several growth markets. One is unified communications, where it has SoCs plus echo cancellation and beamforming algorithms for desktop IP phones, video conferencing systems, voice gateways and other enterprise systems.

Other growth markets for DSP Group include voice control applications in enterprise systems, appliances and consumer electronics. AI-enabled voice control functions, such as wake word detection, are increasingly done on the edge device — the company is seeing more customers running AI in standalone DSPs versus giving these tasks to the application processor.

True wireless stereo earbuds are a rapidly growing market (Image: Shutterstock)

The company is also active in short range wireless with its offering for DECT ULE (Digital Enhanced Cordless Telecommunications — Ultra Low Energy). ULE is a short-range wireless protocol which operates on a licensed frequency band. It is used for IoT communications, particularly home automation, where it competes with Z-Wave and ZigBee. It may seem like a strange combination with DSP Group’s other technologies, but it makes more sense when you consider this technology is descended from DECT, where the company had expertise due to its background with cordless phones.

“What we try to do is find markets where we can become the clear number one leader, because in our domain, if you’re not number one in the markets that you’re serving, it’s very hard to make money,” said Ofer Elyakim, CEO of DSP Group, in an interview with EE Times. “For big companies, mistakes [might] go unnoticed, but for a small public company, mistakes cost a lot, there is no room for error. We look for niche markets where we believe we have all the IP necessary to bring products to market where we can compete effectively, sometimes with companies that are much bigger than us. Once we find such niche markets, we go after them very aggressively.”

Elyakim points out that this strategy paid off in the 1990s with cordless phones, and again five years ago with unified communications; today, the company is a market leader in VoIP for enterprise, where it works with all the top 7 OEMs.

Smart hearables
SoundChip, said Elyakim, is one of the few remaining independent companies in the domain of active noise cancellation (ANC). The company supplies ANC technology, engineering services, design tools and production-line test systems for audio headsets.

ANC is a difficult system-level challenge, since the audio quality depends on complex interactions between acoustic, mechanical and hardware components.

“We believe there is a very good strategic fit between the two companies, in order to provide a differentiated end to end service that none of our competitors can do,” Elyakim said. “From the acoustic design right up to the production line, testing of the product before it gets packaged and shipped.”

Elyakim highlights CSR’s domination of the Bluetooth headset market over the years as an example of what DSP Group wants to achieve in true wireless stereo earbuds. CSR competed with Marvell, Broadcom and others by “crafting an SoC that was designed to be a Bluetooth headset, rather than just a connectivity chip, or just a Bluetooth chip,” he said. “This is exactly what we would like to be in this era of hearables. The quality, the focus, all parts of the solutions that we’re going to provide… it will be end-to-end from processing to the high quality codecs, to all the software and algorithms that come with it.”

One barrier to entry of the ANC market is that the domain is heavily patented by companies such as Bose and Sennheiser. SoundChip’s expertise is invaluable here, Elyakim said.

“The expertise that SoundChip brings enables us to work together with our customers in doing things that do not infringe other companies’ patents,” he said. “It’s much more of an art than a science. It’s about really understanding that if company A does it this way, how can I achieve the same desired result by detouring that?”

DSP Group has agreed to pay $14.5 million for SoundChip, plus up to an additional $6 million based on performance. The transaction is due to close in Q3 2020.

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