Will Nokia deal boost Qualcomm market share?

Qualcomm Inc. is likely to see its spot as the leading supplier of baseband chips for next generation cellphones following its recent deal with Nokia Corp., but the jury is still very much out on just what market share gains it would enjoy, according to market research group iSuppli.

For long arch enemies, Qualcomm and Nokia revealed last week that they would bury the hatchet and that the Finnish handset maker is set to develop high-end 3G phones that will use the latest very high data-rate capable baseband chips from Qualcomm.

The market researchers suggest that in Q4 08, Qualcomm accounted for 40.6 percent of global mobile baseband chipsets revenues, up from 36.3 percent in the previous quarter. It expanded its market share at the expense of the number two in the sector, Texas Instruments, who took a 19.7 percent share in Q4 08, down from 22.1 percent the previous quarter.

According to iSuppli, the top six for handset basebands in Q4 08 were, in third slot, STMicroelectronics (14.5 percent), followed by MediaTek (8.3 percent), Infineon Technologies (4.5 percent) and Freescale Semiconductor in sixth slot with a 2.4 percent share, down from 5.7 percent in the previous quarter.

"Until now, Nokia and Qualcomm have had frosty relations as they battled over intellectual property rights and royalty payments related to 3G technology," said Francis Sideco, senior analyst, wireless communications, at iSuppli.

He adds Nokia has used custom 3G silicon from ASIC powerhouses, ST and TI. "However, with 3G technology maturing, there is less differentiation to be had from custom ASIC solutions, making Qualcomm's standard silicon more attractive as it allows Nokia to focus on enhancing handset designs and service offerings."

Sideco suggests Nokia's latest move to diversify its supply base is a big challenge for others in the handset chips business. He notes that from once mainly using TI baseband silicon, the number one in handsets over the years has added new suppliers, most notably ST, which has just completed a joint-venture with Ericsson that now takes in Ericsson Mobile Platforms and NXP's handset ICs operation.

Nokia's increased business helped then-ST increase its share of global broadband semiconductor revenue to 13.3 percent in 2008, up from 7 percent in 2007. The company also has made increasing use of Broadcom silicon.

"Whether Qualcomm enjoys a major market share bump like STMicroelectronics due to this Nokia deal remains to be seen, but the company is likely to realize gains from finally being able to partner with the world's largest mobile handset brand," said Sideco.

- John Walko
EE Times Europe