Wednesday, June 4, 2008
With Nokia and InterDigital (IDCC) engaged in a prolonged legal battle over licensing issues, the title of this article is sure to raise more than a few eyebrows. I think that recent industry events make this an interesting but overlooked possibility. Here is why –
The IDCC-NXP connection: NXP has licensed IDCC’s 3G HSDPA ASIC design for its PNX6712 chip. The companies entered into this agreement for integration into NXP’s Nexperia cellular chipsets as early as August 2005. Talking about this during InterDigital’s 1st quarter 2008 conference call, its CFO Scott McQuilkin said, “We also completed our delivery of HSDPA technology to NXP and ASIC is now moving into production.”
The NXP-STM connection: STM and NXP entered into a JV last month merging their wireless businesses to acquire scale. You can read my extensive coverage of this event here and here. The formation of a solid number three player stints IDCC’s abilities to sell its SlimChip solution directly. But in the bigger scheme of things, it spells good news for the King of Prussia-based company as the JV widens its footprint. In the most recent quarter conference call, IDCC’s CEO William Merritt resonated this point saying, “Frankly we looked at the combination of ST Micro and NXP and said, ‘Great, they’re getting stronger and they have our IP’ and we love our licensees to be strong and pushing hard into the market..”
The STM-Nokia connection: Nokia last year decided on a multi-vendor sourcing strategy. It now sources 3G from both TI and STM. Additionally, it also transferred about 200 chipset design engineers to STM. This not only signals Nokia’s move away from chipset design, but also presents STM with the opportunity to grab more 3G business at Nokia. It is devoting R&D resources to baseband design and NXP’s team and product are an active part of the equation.
The performance conundrum: Data communication necessitates a better receiver design. Despite the design resources from Nokia, STM will take time to build a competitive solution on its own. On the other hand, the design that NXP has licensed from IDCC is one of the top-performing receivers today. Nokia cannot afford to lag in 3G performance especially considering its high-end mobile market competitors have good solutions. Samsung sources from Qualcomm and Infineon while Apple is expected to have an Infineon chipset in its impending 3G iPhone. So, for the moment, the IDCC design seems to be the most accessible ‘best’ 3G solution for Nokia.
In summary, as STM continues its 3G ramp up, it may use NXP’s design in its platform in the short-term. IDCC, by virtue of its license agreement with NXP, will directly benefit from this move. What is more, this will give IDCC a chance to be part of Nokia phones. Now, that begs another question. Are IDCC and Nokia factoring this in their licensing discussions?