NEC to outsource 3G chipsets

TOKYO: Japan's NEC Corp. said it planned to buy a package of cellphone chipsets and core software that work on both the third-generation network and 2G technologies from Qualcomm Inc. and Ericsson.

The move, aimed at cutting development costs and broadening its range of handset models by using technological resources outside the NEC group, is part of the company's effort to turn around its loss-making mobile phones operations.

Chipsets control the core communication function of mobile phones. As telecoms operators worldwide gradually build up infrastructure for high-speed 3G services, it is imperative for them to offer handsets that are compatible with the advanced format as well as existing networks to maintain area coverage.

NEC, the largest supplier of mobile phones in the domestic market, has already developed a prototype of a new 3G handset based on Qualcomm's chipsets, while it plans to launch 3G phones based on Ericsson's chipsets sometime in the first half of the next business year that starts in April.

Both phones will work on 3G networks based on the W-CDMA format and the current generation networks using GSM and GPRS technologies, which are widely used in Europe and Asia.

NEC, which also plans to develop dual-mode cellphone chips with its semiconductor unit NEC Electronics Corp., aims to sell 6 million mobile phones overseas in the year to next March, including about 1.8 million 3G phones.

NEC did not specify the possible volume or value of packages of chipsets and key software to be purchased from Qualcomm and Ericsson.

Shoring up its mobile phone business is a vital task for NEC, Japan's third-largest electronics maker, after the company in October slashed its operating profit forecast for the year to March by 32 percent to 150 billion yen ($1.46 billion) due to sluggish cellphone sales.

NEC shares closed down 0.52 percent at 569 yen, underperforming the Tokyo stock market's electric machinery index , which fell 0.31 percent.