Qualcomm Passes Texas Instruments in Phone-Chip Sales (Update1)
By Ian King
Feb. 6 (Bloomberg) -- Qualcomm Inc. overtook Texas Instruments Inc. to become the largest maker of chips for mobile phones last year as customers used more of its semiconductors for new devices that surf the Web and download videos.
Sales of Qualcomm phone chips rose to $5.5 billion in 2007, compared with about $5 billion for Texas Instruments, which had dominated the market since the 1990s, said Will Strauss, an analyst at Tempe, Arizona-based Forward Concepts Co. Semiconductor makers provide sales information to Strauss.
Qualcomm profited from new standards that let phones handle Internet data, play songs and send multimedia messages. Verizon Wireless is among carriers that bought Qualcomm chips. Texas Instruments, with semiconductors based on a different technology, has suffered slowing growth as customers including Sony Ericsson Mobile Communications turn to other suppliers.
``Qualcomm has done a marvelous job,'' Strauss said in a telephone interview. Texas Instruments ``lost Sony Ericsson, which was hundreds of millions of dollars.''
Qualcomm shares, which rose 4.1 percent last year, fell $1.07 to $39.65 at 4:03 p.m. New York time in Nasdaq Stock Market trading. Texas Instruments, which climbed 16 percent last year, dropped 25 cents to $29.49 in New York Stock Exchange trading.
``Our customer base has done well and grown their market share, so we've grown with them,'' Sanjay Jha, Qualcomm's chief operating officer, said in a phone interview. ``Our experience at delivering data-enabled chips has really helped us.''
Losing Orders
Sony Ericsson decided to use more parts from STMicroelectronics NV in 2005, a move that hurt Texas Instruments' sales in the fourth quarter of 2007.
Texas Instruments also may lose some sales from Nokia Oyj, its biggest customer. Nokia, the world's largest maker of mobile phones, plans to order parts from a wider pool of suppliers.
In August, Nokia said it enlisted Broadcom Corp., Infineon Technologies AG and STMicroelectronics for future development of some chips. It kept Texas Instruments as a general supplier.
Texas Instruments, based in Dallas, is working on new chips for future Sony Ericsson products. That may let it win back those orders, said Greg Delagi, vice president of the company's wireless business.
``We're not thrilled with the results for 2007, but feel like we've made some progress in laying the groundwork that will help us to grow in 2008 and 2009,'' Delagi said.
Nokia Shakeup
The changes at Nokia mean that Texas Instrument will no longer get 100 percent of orders for so-called baseband chips, the main semiconductors in mobile phones, Delagi said. Still, the move provides the chance to sell other types of chips to Nokia, he said.
``We'll have less than 100 percent, but we'll have a broader opportunity than we've had historically,'' he said.
Texas Instruments grew to dominate the mobile-phone chip market about a decade ago, Strauss said. At the time, Nokia chose the company's chips to replace products from AT&T Microelectronics, which became Lucent Technologies before that company was bought by what is now Alcatel-Lucent SA.
Qualcomm, based in San Diego, reported a 20 percent increase in chip sales in the past fiscal year, which ended in September. The company gets about 30 percent of its revenue from licensing the news technology, called code division multiple access.
Texas Instruments' chip revenue fell 3.1 percent in 2007. The company remains the world's largest maker of so-called analog chips, semiconductors that add electronic functions to a range of devices. Its chips handle button-push signals for locking car doors, measure battery levels in digital cameras and control power use in refrigerators.
To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net
Last Updated: February 6, 2008 16:08 EST |
