|
Nokia attacks semiconductor companies |
|
|
|
Aug 09, 2007 at 02:40 PM |
The mobile handset market may never be the same again if Nokia's recent moves gain traction. Indeed, the impact of the largest and most competitive mobile phone player is already being felt by Texas Instruments, a long-standing large supplier of semiconductors to Nokia.
Qualcomm probably has itself to blame as Broadcom showed in recent legal victories, but Nokia must be really miffed with Qualcomm. Watch out for the impact there in the months to come.
Motorola knows all too well how to lose massive market share in the blink of an eye, with no new products available to replace the highly successful ‘fashion phone' known as the RAZR.
What has all this got to do with the semiconductor industry?
Well, Nokia is undertaking a range of new directions that will shake up semiconductor companies both good and bad.
Firstly, Nokia announced that it is making deep changes to its chipset strategy by moving away from ASIC designs for its phones. Instead, it will publish its own standard rather than relying on the chip supplier's standard. Just think Intel in the chipset field, transfer that to mobile phones, and put on some ‘Nokia Inside' labels!
Nokia will also start selling its technology to semiconductor vendors just like fabless chip vendor Qualcomm, making it almost impossible for chip vendors to develop their own 3G or future technology.
Think I am mad (as I probably am)?
Then so is a long-standing friend who is a financial analyst that once worked for Nokia, covering semiconductor stocks in London and who now covers comms stocks for an investment bank in Finland. The above comments are based on his latest notes to investors and he has hit the nail on the head with many comments regarding Nokia and its competitors in the last year, so this is getting scary!
According to my friend, Nokia will have three technology-specific partners. In the mature GSM world this will be Infineon, which will also be doing the R&D on Nokia's behalf.
In the field of EDGE technology it partners with Broadcom.
In 3G it is making partnerships with ST Microelectronics, which will result in 200 chip designers from ST working for Nokia.
Nokia is aiming to capture a significant footprint in future mobile phone semiconductor technology. It will potentially become one of biggest licensing IP houses in this field and reap the high margins that are possible from this business model.
That will affect many semiconductor suppliers as well as Nokia's rival mobile phone competitors, in turn impacting the competitors' suppliers.
TI is a good example of this shift already taking place. It has lost market share to Qualcomm but is also losing business directly with Nokia at ST's gain.
TI and Qualcomm have roused a bear from its hibernation a little too early for comfort. TI's move to fab-lite and reliance on TSMC for future process technology partnership was one interruption and Qualcomm's licensing pricing policy another; any more and the roar from Nokia will be heard even louder!
|
August 2007 
