Korean vendors boost STE and Infineon in reviving market
Published: 10 June, 2009
The growth of the Korean handset makers is benefiting cellphone chip suppliers ST-Ericsson and Infineon, but both are under severe pressure from Qualcomm even as the wireless chip market appears to be picking up.
Infineon revealed that LG is its largest wireless baseband customer, while newly formed joint venture ST-Ericsson has won a headline deal with Samsung. Working with its local Chinese subsidiary T3G, it is providing Samsung with the platform for the world's second phonemaker to leap to the high end of the China Mobile handset range. Samsung will soon release the Emerald (also called the GC-I6320C) for the giant cellco, supporting the TD-SCDMA version of HSPA, as well as GSM/EDGE. The dual-mode, dual-band device (2010-2025MHz/1880-1920MHz) boasts download speeds of 2.8Mbps and will go straight to the top end of Mobile's portfolio, vying with imminent launches by Nokia.
"This commercial launch by Samsung is a significant step in the development of TD-SCDMA-based data services in China," said ST-Ericsson CEO Alain Dutheil, speaking to EETimes. ST-Ericsson will also help the Chinese cellco, which is determined to have a high level of control over the design of its phone hardware and software, to develop high end and low cost handsets for its 3G network. Models from three further vendors will follow the Samsung one, and should include smartphones from Nokia, for which STE is the strategic partner for high end HSPA phones.
However, while STE is seeing strong opportunities in China, the US is more of a problem, especially because of key customer Nokia's weakness there. The joint venture is looking for US growth as a near term priority, Dutheil said in an interview with the London Financial Times, adding that another key objective is to get STE processors and baseband chips into more tier one smartphones, particularly those from US vendors, such as the iPhone or new BlackBerry models. This would consolidate the company's position at the high end, and reduce dependence on Nokia in this area, while putting pressure on BlackBerry supplier and market leader Qualcomm.
"We have no American companies among our top five customers. We need to convince them to work with us," Dutheil told the FT.
He has a tough job. Although STE is well positioned in technology terms and through its relationships with Nokia, Samsung and Ericsson, it is lossmaking and needs to increase its design wins, particularly as Qualcomm strengthens its position. STE last week announced plans to cut 146 jobs in France and wind down operations at its plant in Caen, France, in response to poor market conditions. The firm made an operating loss of $98m in its first two months.
"With our restructuring plan it is possible to reach breakeven in the second quarter of 2010, but I am not saying we will. It depends on whether we can get topline growth, and it depends on the market," Dutheil said.
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