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More Competition for InvenSense ?2

INVN is up over 2% this morning in conjunction with some broader market relief, but I see medium to long-term execution risk increasing.  I've been saying for a while now that it will probably take until the end of the year for InvenSense to start showing much improvement on margins, and thus the bottom line.  In rough chronological order, that depends on the success of OIS, Firefly, software, and the Shuttle program.  The last of these will have new competition in the form of a collaboration between Taiwan Semiconductor and Cadence Design Systems.  I'd actually suggested a tie up between Cadence and InvenSense in this article, and the ultra-low power voice trigger is one of the features I'd looked to see developed.

In the meantime, we almost certainly have a new set of iPhones coming out, and I see that as evenly balanced between risk and reward.  Longer term than that, I think the risk is increasing.  My guess is that success for InvenSense ultimately boils down to a question of whether innovation is going to be driven by mega-corporations which control (either directly or indirectly through volume negotiations) their entire supply chains, or by smaller (more inventive?) entities.  If its the former, then much software and other design will be done in-house and InvenSense's development will continue to be commoditized in the short term, and eventually marginalized altogether.  The chance that such large industry players will buy InvenSense in the race to compete remains, but I'm increasingly reluctant to count on that.