re: 3G Chip Partnerships & Acquisitions
Handset makers require combined processor and software-handling chipsets.
Acquisitions:
TI Condat (Germany), Phoenix Design, Burr Brown
Tality Symbionics (UK)
Infineon Seiworx
Partnerships:
ARM IBM, Motorola, TI
Intel Microsoft
Nokia TI, LGE
Parthus UbiNetics
TI Nokia. Microsoft
>> Chipmakers Clamour for 3G Partners
European mobile software in demand with US chip giants
Madeleine Acey
FT Investor
March 1, 2002
Texas Instruments' latest acquisition extends a trend for US and Asian chip companies to team-up with European specialists to stake their place in the emerging 2.5G and 3G mobile phone market.
Specialists in Europe are in great demand as companies that have previously focused on the computer industry try to provide a quick route to market for a growing group of handset makers who require combined processor and software-handling chipsets.
TI (TXN) said on Friday it would buy the 89 per cent of shares it did not already own in Germany's Condat (DE:531090: news, chart, profile) for €12 a share, roughly a 150 per cent premium. Condat makes GSM and GPRS communications software for wireless devices.
Nokia
The acquisition follows two tie-ups this month between the US chip maker and Nokia (NOK). The pair joined forces in mid-February to offer handset makers a complete range of software and processor technology for smart phones. Then on Thursday they announced they had formed, with others including LG, a company in China to develop software and chips and 3G wireless devices to put them in.
TI sells its mobile phone technology to companies including Chinese PC maker Legend.
At the same time Intel (INTC) declared an intention to dominate the mobile phone chip market in partnership with Microsoft. IBM (IBM) immediately said it would challenge the PC chip giant head-on. One analyst said he expected Intel to make acquisitions to support its plan.
"Everyone's looking to be involved," said Andy Buss, an analyst at mobile computing market research firm Canalys. He said the Condat acquisition would allow TI to offer a "plug and play" product. "TI provides a radio controller, it doesn't have an easy 'plug and play' solution to hook into the radio applications.
"Intel will probably look at doing similar types of things later this year... It will want to plug in and go. To provide the same full functionality. Intel may look to make acquisitions or take an equity stake in a company like TI have."
"I'd say there's quite a hotbed of activity," said Jim Tully, chief analyst at computer industry researcher the Gartner Group.
He said US chip developer Tality had acquired UK wireless technology designer Symbionics and Infineon (DE) had snapped up Seiworx.
Phil Smith, technology hardware analyst at London stock broker Teather & Greenwood, added: "These companies are looking for very niche technologies to make complete customer offerings. The name of the game is to make the design process easier for the customer, software development is time consuming."
He said TI had already bought UK specialists Phoenix Design and Burr Brown.
Complexity
Expert knowledge and experience were important as the 3G or third generation mobile phone world dealt with layers of complexity, he added.
"It's complex just to run and process 3G signals, then there's lots of applications on top of that. You need software to access the Internet, to process video to take photographs and transmit them.
Computer industry leaders, such as Microsoft (MSFT), IBM (IBM) and Oracle (ORCL), were at a disadvantage, he said, adding that Europe had taken the lead in the mobile phone technology market.
"Power consumption is a real issue and there's not much space for memory. There is no room for 'fat' software," he said, referring to the trend for PCs stuffed with software that wasn't always necessary.
Gartner's Mr Tully said Intel had for around nine months been seeking relationships with intellectual property providers to help make custom-designed chips.
In this area it already used, along with peers including Motorola, technology from UK chip designer ARM Holdings (UK:ARM) - a leading player in the communications chip market.
Teather & Greenwood's Mr Smith said chip designers like ARM rival Parthus (UK:PRH) had the right strategy. The Irish company had teamed up with Cambridgeshire 3G equipment company UbiNetics to offer a complete package to chip makers up front.
Asia
But he said he thought the most interesting area was Asia where handset makers' experience with i-mode mobile data services could boost their position.
"The Far East doesn't have a lot of world-beating software corporations but the mobile phone is a consumer electronics market - it's their backyard. This is their way back in. Samsung (SSGFY) is rapidly growing their market share in handsets." He said Asian developers had the most experience of developing complex applications for mobile phones because of NTT DoCoMo's (NTT) i-mode.
"I think we're going to see a lot more tie-ups."
Mr Buss from Canalys agreed that the dynamics in the industry were shifting. As most of the leaders - such as Nokia, Motorola (MOT) and Ericsson (ERICY)- were making their handset technology available to generic contract manufacturers, network carriers could become the top brands.
BT's spin-off mm02 (UK:OOM) announced last year it would have its own smartphone/handheld computer made in Taiwan. Mr Buss said that France Telecom's (FR:013330) Orange recently showcased an Orange-branded phone.
"When does the Vodafone (UK:VOD) brand or Orange become dominant over Nokia?" he said. <<
- Eric - |
