Rumor: Nokia to start using MediaTek chipsets in an effort to reduce costs?

Now that Nokia’s decided to make all their phones in Asia in order to try and save some money, why not also go with cheaper Asian components? According to DigiTimes, who has a mixed track record, but have proved themselves reliable numerous times in the past, Nokia is considering going with either MediaTek or MStar Semiconductor for future low end devices. Now this isn’t the first time we heard this story. Last week Eldar Murtazin, Editor in Chief of Mobile-Review, tweeted: “MStar Semiconductor will deliver 2g baseband chip for Nokia.” We didn’t cover that tweet because frankly there was a ton of other news happening, but this story is worth exploring. Right now Nokia depends on Texas Instruments and ST-Ericsson for a majority of their chipsets. Forget about the Windows Phones for a second, all those run on Qualcomm. TI and ST have been struggling because Nokia’s been struggling, and now that Nokia is considering dumping them to go with a cheaper provider … what exactly does that mean for the future of those two companies?

To be fair, TI and ST have plenty of other customers, with the former being one of the few partners Microsoft has chosen to build an ARM version of Windows 8, but regardless, Nokia provided an important lifeline. So who is MediaTek anyway? You likely haven’t heard of them because a majority of their stuff never leaves China. Just yesterday we filed a report about their new ARM Cortex A9 system on chip and wondered when, if ever, we’d see it in products sold outside of China. While the DigiTimes article specifies Nokia wants cheap chips for “2.5G and 2.75G handsets”, it wouldn’t be a stretch to suggest that they could partner with MediaTek in the future for 3G chipsets. At that point MediaTek would become ridiculously large, and ST-Ericsson may start considering jumping on a bread line.