Samsung multi-sources 3G now

Thursday, May 29, 2008

Samsung announced recently that it was sourcing 3G chipsets from Infineon as well. This is yet another indication of the larger trend amongst handset makers to source from multiple chipset-vendors. While this is a jolt to Qualcomm's 3G market share expansion plans, it is great news for Infineon and its 3G ally, InterDigital.

The move away from Qualcomm is significant on at least three counts. Firstly, it suggests that as much as performance is important for data networks, the competition has succeeded in narrowing Qualcomm's lead there. Secondly, the lower cost of Infineon's solution speaks well of the company's IP position. Thirdly, it expands InterDigital's 3G product footprint.

It is bad news for Qualcomm. One of the key reasons for Samsung's move is that it found a viable performance alternative for a cheaper price. That underscores the issue for Qualcomm. Until now, the company was charging a premium for its superior performance and its support network. However, as a recent Signals Research Group report points out, there are at least three other solutions with comparable performance in the market today, Infineon being one of them. These alternatives become attractive if the handset vendors discount Qualcomm's reliability and support.

It is good news for Infineon. The company is expected to be central to the 3G iPhone. With design wins at Samsung, the German semiconductor company will grow its 3G market share at the expense of Qualcomm. With the lower overhead coming from its comfortable IP position, Infineon can afford to undercut Qualcomm's pricing to gain further traction.

It is better news for InterDigital. The company supplies the 3G software stack for Infineon's solutions and stands to make money off every 3G Infineon chipset sold. So, while the King of Prussia-based company is involved in a prolonged legal battle with Samsung on IP issues, this will open up another channel of revenue from the Korean handset maker.

InterDigital's SlimChip, though one of the best, has not got substantial direct traction in the market. On the other hand, the company, through its alliance with Infineon and its product IP core licensing initiatives, is looking to expand its footprint at a fast rate. Apart from the Samsung design win, I am particularly curious how 3G will play out between STM and Nokia. (Stay tuned for an analysis of how InterDigital may benefit from the STM-Nokia relationship in the wake of recent industry events.)

In summary, Samsung has reiterated the move towards multi-sourcing. Like some of the other wireless segments, pricing and time-to-market will likely drive mobile baseband as well. That is if Qualcomm's competitors can stand up to its deep pockets and deliver consistently.

Posted by Vijay Nagarajan at 9:00 PM  

2 comments:

I just came across your bog, and I think it is excellent.
I immediately added it to my subscription list.
I am particularly interested in your coverage
of InterDigital, which I cover at http://ww
w.phillytechnews.blogspot.com. Thanks again.
BTW, your "Contact" link doesn't appear to be working right now.

tom said...
May 31, 2008 at 9:50 PM  

Tom,

Thanks for your note. I will look at your blog soon. Thanks also for bringing the 'contact me' issue to my notice. I will look into it.

Vijay

Vijay Nagarajan said...
June 1, 2008 at 12:11 AM  

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