Nokia to outsource chip development
Sunday, 19 August 2007
David Ibison in Stockholm and Maija Palmer in London
Nokia, the world's largest maker of mobile phones, is to stop in-house development of semiconductors for most of its mobile phones and outsource the business to third parties.
The Finland-based company said the move would free an undisclosed sum for research into more complex chips needed for its advanced multimedia, internet-enabled handsets.
Nokia will use four chipset suppliers - Texas Instruments, Broadcom, Infineon Technologies and STMicroelectronics. Chipsets are combinations of integrated circuits that operate together.
The Finnish company also said it would licence coveted modem technology for the first time, so generating additional revenue.
The decision to broaden its range of chipset suppliers and licence proprietary technology for high-speed WCDMA/HSDPA mobile phone chips will be an opportunity for chip companies such as STMicroelectronics and Broadcom to enter a new market.
Only Nokia, Ericsson Mobile Platforms and Qualcomm are believed to have the technology to make cost-effective WCDMA/ HSDPA chips.
"We will have more players in the industry who will be total solution providers," said Niklas Savander, Nokia's executive vice-president for technology platforms.
On Wednesday, Nokia shares closed 4 per cent ahead at €22.48 in Helsinki. Broadcom rose 9.8 per cent to $35.98 by the close in New York and STMicroelectronics shares were little changed at $16.91. Infineon rose 2.7 per cent to €11.36.
However, Texas Instruments fell 0.3 per cent to $33.73 and Qualcomm slipped 0.3 per cent to $40.15.
Richard Windsor, an analyst at Nomura, said: "This is the most negative news for Qualcomm, which makes excellent margins in WCDMA chipsets."
He added that the company will now face much greater competition and pricing pressure in the long-term."
Nokia's move to broaden its range of chip suppliers is also negative for Texas Instruments, which has been Nokia's sole supplier of 3G and Edge semiconductors but will now have to compete with others.
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FT syndication service
Nokia, the world's largest maker of mobile phones, is to stop in-house development of semiconductors for most of its mobile phones and outsource the business to third parties.
The Finland-based company said the move would free an undisclosed sum for research into more complex chips needed for its advanced multimedia, internet-enabled handsets.
Nokia will use four chipset suppliers - Texas Instruments, Broadcom, Infineon Technologies and STMicroelectronics. Chipsets are combinations of integrated circuits that operate together.
The Finnish company also said it would licence coveted modem technology for the first time, so generating additional revenue.
The decision to broaden its range of chipset suppliers and licence proprietary technology for high-speed WCDMA/HSDPA mobile phone chips will be an opportunity for chip companies such as STMicroelectronics and Broadcom to enter a new market.
Only Nokia, Ericsson Mobile Platforms and Qualcomm are believed to have the technology to make cost-effective WCDMA/ HSDPA chips.
"We will have more players in the industry who will be total solution providers," said Niklas Savander, Nokia's executive vice-president for technology platforms.
On Wednesday, Nokia shares closed 4 per cent ahead at €22.48 in Helsinki. Broadcom rose 9.8 per cent to $35.98 by the close in New York and STMicroelectronics shares were little changed at $16.91. Infineon rose 2.7 per cent to €11.36.
However, Texas Instruments fell 0.3 per cent to $33.73 and Qualcomm slipped 0.3 per cent to $40.15.
Richard Windsor, an analyst at Nomura, said: "This is the most negative news for Qualcomm, which makes excellent margins in WCDMA chipsets."
He added that the company will now face much greater competition and pricing pressure in the long-term."
Nokia's move to broaden its range of chip suppliers is also negative for Texas Instruments, which has been Nokia's sole supplier of 3G and Edge semiconductors but will now have to compete with others.
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FT syndication service