Motorola expands wireless relationship with Texas Instruments

By Suzanne Deffree -- Electronic News, 1/29/2007

Motorola Inc. has expanded its relationship with Texas Instruments Inc. to include 3G, WiMAX and OMAP technologies in the design and development of new mobile devices, a move some analysts believe could help secure TI’s ailing wireless group.

The expanded relationship covers current, emerging and next-generation wireless standards and uses intellectual property from both companies. The core of the expansion will see Motorola develop 3G handsets based on a TI customized 3G solution that will include processors from TI's OMAP 3 architecture, as well as 3G and 3.5G building blocks from both Motorola and TI. Handsets using this solution are expected to be available to consumers as early as 2008, Motorola said.

“We think that the timing of such an announcement should improve sentiment toward TXN's [TI’s] wireless handset position, which has come under some scrutiny with the global mix shift of handsets to the low end, resulting in lower revenue opportunities than the more robust 3G product offerings,” Tim Luke, an analyst at Lehman Brothers, said in a research note this morning. “While this announcement has been widely anticipated, we believe it may be viewed more positively.”

The scrutiny Luke refers to reaches beyond Dallas-based TI. Indeed, the New York-based firm reported waring signs in the wireless communications segment as far back as November, when it also noted a broad weakness among the top market players, including such companies at Nokia, Motorola and National Semiconductor. 

The expanded relationship also serves to cement TI’s place at Motorola’s side in the handset market, and comes just weeks after the company’s 3G partnership with Ericsson Mobile Platforms (EMP) shrunk in size by EMP announcing a 3G agreement with STMicroelectronics.

“The arrangement strengthens TXN's position at key customer MOT [Motorola],” Luke said. “The direct supply relationship between MOT and TXN has grown significantly in the past year, most notably on entry-level handsets with TXN's LoCosto solution powering the MOTOFONE.

“We also consider that TXN has come under recent competitive pressure at former strongholds such as Nokia (STMicroelectronics beginning to ship some applications processor business) and Ericsson Mobile Platforms (expansion of relationship with ST to supply digital baseband technology along with TXN). Though we are uncertain what this may mean for TXN and top customer  Nokia, we  think that longer term Nokia may follow a similar path as competitor MOT  and expand its supplier base beyond TXN, whether by expanding its  relationship with STMicro or adding a new supplier such as Freescale  or Infineon.”

The expanded agreement will further see TI support Motorola's mobile WiMAX initiative -- including development of a customized Motorola WiMAX solution -- and provide digital design elements, high-performance analog components, RF solutions, and manufacturing process and fabrication knowledge. The solution will focus on core 802.16e mobile WiMAX functionality supporting voice, video and data for low-power mobile applications; will be manufactured in 65nm; and is expected to be ready to support production of new mobile devices that Motorola plans to launch during 2008.

Motorola has also selected solutions from TI's OMAP 2 and OMAP 3 product portfolio and OMAP-Vox family, including the OMAPV1035 GSM/GPRS/EDGE single-chip solution from the eCosto platform and the OMAPV1030 GSM/GPRS/EDGE chipset. The company said it plans to use the OMAPV1035 solution, which uses TI's innovative DRP technology, in low-cost multimedia mobile devices expected to be in the market in 2008. Motorola also plans to use the OMAPV1030 chipset in new mid-range multimedia mobile devices expected to be in the market later this year.