Nokia teams up with STMicro for mobile phone chips, widens supplier base

Mumbai: Nokia Corp. will form a partnership with semiconductor major STMicroelectronics to develop third-generation (3G) chips for its mobile phones in a move to widen it chip supplier base.

Nokia also announced a move to license out its modem technology to chipset vendors in order to bring in additional revenue and allow new players to enter the market.

Nokia has also picked Broadcom as a supplier of EDGE chipsets and Infineon Technologies (IFX) for GSM technologies.

The shakeup will see Nokia work with four chip suppliers, reducing its reliance on Texas Instruments and Qualcomm, its current suppliers. These chipsets are used in new phones that allow customers to download music or browse the internet quicker than on traditional models.

As part of the deal with STMicro, Nokia would transfer some 200 of its employees in Finland and the UK to the Franco-Italian firm.

News of the transaction, which represents STMicro''s (STM) first design win for a complete 3G chipsets, lifted shares of both companies.

Finland-based Nokia, the world''s largest mobile phone manufacturer, said the strategy shift would help widen its supplier base and foster more innovation and competition in the chip industry.

The deal will allow Nokia to focus on its core competencies in chipset development as well as free up resources to invest in the research and development of software to power internet services, which it sees as a key growth area.

The decision to broaden its range of chipset suppliers and license 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.