Motorola announced it will no longer purchase 3G chips from Qualcomm, instead turning to rivals Freescale Semiconductor and Texas Instruments for its future chip shopping needs. Motorola credited the supplier switch to "business reasons," not engineering issues, although Qualcomm's ongoing legal battles with Broadcom and Nokia as well as the International Trade Commission's ban on its 3G chips is almost certainly a factor in the decision as well.
"We have confirmed that Motorola has already begun to shift resources away from Qualcomm 3G efforts towards Texas Instruments," writes American Technology Research in a Barron's article reporting the news. "Checks suggest a dramatic about-face on business rather than technical issues, with designers now encouraged to minimize Qualcomm in new products…We believe Motorola's decision was purely business as our technical contacts had suggested many Qualcomm-based WCDMA designs in the pipeline and a general preference amongst Motorola designers for Qualcomm, despite the higher pricing. Our checks reveal that Motorola found Qualcomm 'hard to do business with,' which we interpret as either too high-priced, or also having something to do with the royalty rates."
ATR estimates 35 million 3G phones for Motorola in 2008, which translates to $700 million in sales and 10 cents in earnings per share of lost opportunity for Qualcomm.
For more on the Motorola moves:
- read this Barron's article