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Lenovo may set up its own chip unit

Chinese vendor aims to expand in smartphones, with an NEC acquisition and homegrown processors among the options


Published: 3 April, 2013

READ MORE: M&A | China | Semiconductor | Handset

Lenovo may be a PC giant, but like most of its PC rivals, it has made little impact on the mobile world - until recently, when it leapt into the smartphone top two in its native China and started talking up grand plans for international sales. These may include designing its own mobile chips, and acquiring NEC's handset unit, according to this week's reports.

Lenovo plans to expand its current small team of chip designers from about 10 to over 100 engineers, says EETimes, in order to focus on differentiating its smartphones and tablets, Apple-style, with its own processors.

A "China-based industry source with direct knowledge of Lenovo's recruitment of chip designers" told EETimes that Lenovo aimed to recruit 40 engineers in Shenzhen and 60 in Beijing, to form the hub of a full silicon division, similar to the HiSilicon unit run by Huawei.

Lenovo has used a mixture of chips in its smartphones, including the MediaTek MT6573 in its A60 model land Samsung's quad-core Exynos 4 in its LePhone K860. It then hit the headlines by becoming one of the early adopters of Intel's Atom smartphone chips - the single-core Medfield appeared in the K800 smartphone, and the new dual-core Z2580 is in the K900. Insiders say Lenovo has wanted greater processor independence, however, since Samsung refused to supply its newest Exynos model, perhaps to keep a lead for its own handset unit. Lenovo is challenging Samsung Mobile's number one position in the Chinese smartphone market - last year the Korean giant had 17.7% share and Lenovo had 13.2%, ahead of Apple on 11%.

A team of 100 will not make Lenovo self-reliant in silicon but it could help it to create designs on which it can cooperate with more malleable partners than Samsung.

The Chinese vendor is also in the frame to buy NEC's troubled cellphone unit, According to Reuters, the Japanese company is in talks with various possible buyers, most of them Japanese, but Lenovo is considered the frontrunner by many. CEO Yang Yuanqing has made it clear the company would welcome acquisitions to expand its mobile reach and said recently that he would be open to making a bid for BlackBerry.

NEC's handset business has made losses for two years and has failed to make much impact outside its homeland, while traditional ties with NTT Docomo and other local carriers have weakened as Japanese consumers have embraced iPhones and Galaxies. NEC said in a statement it was "considering a number of ways to bolster the competitiveness of our mobile phone business, but nothing has been decided".

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