Nokia to outsource chip development

Nokia has announced it will outsource the bulk of its handset chip development to four semiconductor firms.

It is also transferring most of its ASIC chip group, including about 200 staff, to Italian-French chip-maker STMicroelectronics.

Nokia said the move to license out its technology would enable it to focus its R&D on software and services, while also getting the best return from the chipset industry.

Nokia has contracted long-term supplier Texas Instruments for all types of chipsets, Broadcom for EDGE chips, Infineon for GSM and STMicroelectronics for 3G chips.

"The technology landscape is growing and the number of technology areas Nokia needs to manage is growing all the time. In particular, software and services are playing an increasingly important role in Nokia's world strategically," said Niklas Savander, executive vice president, Nokia technology platforms.

He said Nokia would retain its core modem business - the function that mediates between digital processors and analog radio - where it had "a very strong IPR position".

"Our modem technology is a high-value asset," Savander said.

He said the new approach meant Nokia had a dual sources for all its chips and would also take advantage of the increased consolidation of the chip sector.

"Given Nokia's massive volumes, it is important we don't have bottlenecks and have a range of competitive solutions at any given time. "

Savander said consultations were still underway over the transfer of staff to STMicroelectronics. The value of the transaction would be disclosed in the fourth quarter, he said.

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