Motorola to use Qualcomm UMTS 3G chipsets

The supplier deal with Qualcomm could give Motorola a leg up in its mobile devices business unit recovery efforts, as next-generation wireless adoption continues.

By Suzanne Deffree, Managing Editor, News -- Electronic News, 1/23/2008

Motorola Inc today announced it has expanded its relationship with Qualcomm Inc to include next-generation UMTS 3G chipsets and will design the Qualcomm chipsets into certain UMTS 3G handsets beginning at the end of 2008 and in 2009.

Motorola has similar supplier deals in place with Qualcomm competitors, including Texas Instruments and Freescale.

“Qualcomm is a valued supplier and I am excited about the UMTS opportunities we are pursuing together,” said Alain Mutricy, senior VP of platform technology for Motorola’s mobile devices business, in a statement. “This agreement represents a further step in the execution of our silicon strategy.”

Motorola made the announcement today just moments before releasing its Q4 and full-year 2007 numbers,   reporting significant losses on its weak mobile devices unit. The unit has been a trouble spot for Motorola for several quarters, as the company has repeatedly blamed losses on the business and has slipped behind both Nokia and Samsung in terms of mobile phone shipments.

Motorola CEO Greg Brown owned up to the business’ issues in the company’s financial statement today, but warned that a mobile devices recovery would not come soon. “We are focused on aggressively rationalizing the company’s cost structure and working to get mobile devices back on track. The recovery in mobile devices will take longer than expected and there is a lot more work to be done. Our primary focus is on improving profitability and enhancing our product portfolio in this business,” he said.

Today’s deal with Qualcomm could give Motorola a leg up in its mobile devices efforts, as next-generation wireless adoption continues.

“As 3G roll outs in North America and Europe moderate over 2008, we expect carriers may aggressively market new 3G high-speed data networks driving growth in EV-DO and UMTS chipset and handset shipments,” Tim Luke, a Lehman Brothers analyst, said in a research note this morning.
 
While Motorola and Qualcomm held back specific details, Lehman speculated that Motorola may begin deploying handsets with Qualcomm’s chipsets for UMTS 3G toward the end of 2008 and that initial phone shipments may actually start as early as Q3 with more significant ramp through 2009. The analysis company also believes Motorola may design in Qualcomm’s chipsets into its mid- and low-tier UMTS handsets.

Today’s deal between Motorola and Qualcomm follows a 2006 UMTS agreement that saw the two companies begin collaborative work to bring UMTS handsets to global markets.