Infineon lands Nokia deal for entry-level phones

Infineon (NYSE: IFX) said Nokia (NYSE: NOK) would use the platform, called E-GOLD voice, in handsets designed mostly to make phone calls, and equipped with a few basic features such as color screen and text messaging. These bare-bone handsets are in high demand in emerging markets such as India and China, where Nokia has a strong presence.

The single-chip system integrates power management, radio frequency and the baseband — the brains of the phone — into one product, making it possible to build a cell phone for under $20. Infineon had previously only supplied Nokia with radio-frequency components.

The deal means Nokia, which traditionally uses its own phone designs, will now be using Infineon’s design instead for the phone’s system.
That’s a blow for U.S. rival Texas Instruments (NYSE: TXN), which provides the proprietary processors upon which almost all of Nokia’s radios are currently designed.

"We suspect that Infineon has offered favorable terms to Nokia to win this business and this is likely to put Texas Instruments under pressure to follow suit," said Richard Windsor, a U.K.-based analyst with Nomura.

He added, however, that it would take some time for Nokia to migrate its platforms, design and logistics to accommodate a new chipset supplier. As a result, he doesn’t expect TI to be under too much pressure before 2008.

An Infineon spokesman said the E-GOLD solution will be used for production of a new GSM phone that’s part of Nokia’s 2008 portfolio.

Source: Market Watch

Most wicked part of this article:

The single-chip system integrates power management, radio frequency and the baseband — the brains of the phone — into one product, making it possible to build a cell phone for under $20. Infineon had previously only supplied Nokia with radio-frequency components.