TI seeks to expand customer base with new phone chip

Sinead Carew

NEW YORK/TOKYO: Texas Instruments Inc on Tuesday introduced a high-speed wireless chip for use by a wider set of mobile phone makers, initially in Japan and later in other markets around the world.

The chip is based on W-CDMA, a technology that can support features such as mobile video and Web and is gaining ground in Europe and parts of Asia. It pits TI, the top mobile phone chip maker, against rivals such as Qualcomm Inc. and Freescale Semiconductor Inc.

TI developed the chip with Japan's top mobile carrier, NTT DoCoMo Inc. Analysts expect the relationship to help TI win business with DoCoMo's suppliers.

The move into standard W-CDMA chips by TI -- currently leader in that chip market with custom-designed products -- could help reduce the price of advanced phones based on the technology, which is also called third-generation, or 3G.

"Overall, we estimate total handset cost savings can be anywhere between 10 to 30 percent," TI Vice President Alain Mutricy told a news conference in Tokyo.

The chip has a dual role of controlling wireless communication and driving multimedia functions such as still and video camera recording and video chat, resulting in substantial cost cuts for handset makers, TI said.

Yankee Group analyst John Jackson said: "This will allow the manufacturers to get 3G phones to market with the same bang but less buck."

The new product, known as the OMAPV2230, represents a move beyond the custom W-CDMA chips TI makes for major customers including Ericsson and global No. 1 phone maker Nokia, analysts said.

"Without the standard chips, they wouldn't be able to expand their market outside of their two biggest W-CDMA customers," said Will Strauss, president of research firm Forward Concepts, who sees the chip bringing new business.

For example, DoCoMo suppliers NEC Corp. and Matsushita Electric Industrial Co. Ltd.'s Panasonic plan to use the latest chip, according to a person familiar with the matter.

Strauss said potential customers could include other Japanese cell phone suppliers like Sanyo Electric Co. Ltd. and Sony Corp., Korean cell phone makers LG Electronics Inc. and Pantech Co. Ltd., and emerging Chinese phone makers such as Ningbo Bird Co. Ltd. and TCL Communication Technology Holdings Ltd.

Besides W-CDMA technology, the new chip also works on GSM and GPRS networks, which are widely deployed in Europe and Asia, helping Japanese suppliers to make handsets that can be used both at home and abroad.

Japanese second-generation mobile phone networks are based on a unique, home-grown technology, and handsets working on those networks cannot be used overseas.

TI did not name any customers, but said manufacturers were already designing phones for the new chips. It expects the first phones with the chip to go on sale in Japan next year.

About 46 million W-CDMA phones are expected to be sold in 2005 with sales expected to grow to 90 million in 2007 and about 255 million in 2010, according to Strauss.

Texas Instruments said its customers have also begun testing its OMAP2430 applications processor, designed to improve how applications such as video work on phones.

(Additional reporting by Kiyoshi Takenaka in Tokyo)