Analyst: Freescale abandons plans to sell cellular unit

Semiconductor firm Freescale has given up plans to sell its cellular unit and instead will scale back the business, according to a report from Will Strauss at Forward Concepts.

The company last year put the business up for sale, but apparently failed to find a buyer willing to pay what it was asking. Strauss said in a recent report that the company will continue to run its cellular operations--albeit slimmed down--and will continue to produce iDEN kit for Motorola and Research In Motion.

"Staff reductions have brought the division down to a more appropriate size. Freescale's cellular revenues in the second quarter were up 45 percent to the $138 million level, attributable to Sprint Nextel's promotion of its flat-rate 'Boost' (iDEN) service,'' Strauss wrote. However, the business' long-term outlook is not bright, he said.

''We estimate that about 3.8 million iDEN handsets will ship in 2009, but the long-range prospects are not good as this market will continue to decline as 3G continues its worldwide buildout," Strauss wrote.

Freescale representatives were not immediately available for comment.

Freescale had an operating loss of $345 million in the second quarter, wider than an operating loss of $137 million in the year-ago quarter. The firm is not the only chip maker to reorganize its cell phone business; Texas Instruments shifted away from making baseband chips for mobile phones, and is hoping to compensate with sales of application processors for smartphones.

For more
- see this EETimes article [1]

Related Articles:
TI claims savings from shift away from baseband chips [2]    
Broadcom, Freescale post large losses [3]
Freescale gets new CEO, faces challenging times [4]