By Gabriel Perna: Subscribe to Gabriel's RSS feed
July 6, 2010 7:07 PM EDT
Mobile phone giant Nokia said it has sold its wireless modem business to Japanese semiconductor manufacturer Renesas Electronics for approximately $200 million.
The wireless modems are found within Nokia's handsets. Renesas has licensed them from Nokia since 2009, and the two companies have been working together to develop a HSPA+/LTE platform.
As part of the deal, Renesas will take over Nokia's wireless modem technologies for LTE, HSPA and GSM standards modem technologies. Nokia will also transfer certain patents related to the wireless modem technology. Renesas will also gain 1,100 Nokia employees that work in wireless modem research and development.
Analysts said the move is a positive for Nokia, which is exiting a non-core business that has a lot of competitors.
"We have to understand the size of the business, from what Renesas is paying, is very small," Chris Versace, Think 20/20 LLC, analyst. "There are a number of players within the data card business: Sierra, Novotel and a number of Asian manufacturers. What Nokia is doing, is exiting a business that's increasingly hard to compete in and focusing back on their core"
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Jeff Orr, principal analyst for mobile devices at ABI Research, agreed. "This area is not core to Nokia's future. The wireless modem is a commoditized component. They don't feel they have to innovate or differentiate from others in the market as they have the last several years," he said.
In a statement, Kai Oistamo, executive vice president at Nokia, said, "Wireless modems are an integral part of today's chipset solutions, and we believe that Renesas Electronics, as one of the key chipset vendors in the market, is in an ideal position to further develop this offering. The alliance enables us to continue to focus on our own core businesses."
The transaction is expected to close in the fourth quarter.
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