Renesas Buys Nokia Modem Division
We tweeted this news four hours ago – with attribute link to the source at IntoMobile – and included a comment but it still has not appeared there so thought we’d cover this on WWJ directly instead. That thread is pasted in full below with Screen-Shot of Our Comment Here.
The wireless modem, arguably the most important part in a mobile phone since without it you’d basically have an oddly shaped device that can act as a personal digital assistant and less than stellar camera, has always been one of Nokia’s strongest assets. Say what you will about Nokia’s S30, S40, Symbian, or MeeGo/Maemo devices, their reception is always top notch compared to say something like the iPhone, or any of the numerous Android devices out on the market built on Qualcomm’s mobile platforms such as the ever so popular Snapdragon.
It’s with great confusion then that I have to report today’s news. Nokia sold their wireless modem business to a Japanese company called Renesas for $200 million. Not only will Renesas get Nokia’s wireless modem technologies for LTE, HSPA and GSM standards, they’ll also get an untold number of patents, and 1,100 R&D employees, most of which are based in Finland, India, the UK and Denmark.
Now for the analysis. Back in 2007 Nokia gave up their ASIC designers (the guys who build the chips that go into mobile phones) to STMicroelectronics. So while Nokia went ahead and dumped that part of the business, Apple purchased P.A. Semi so that they could become even more vertically integrated. Now Nokia is also getting rid of their wireless modem business. It looks like the company is trying to focus more and more on software, and less on the little bits. It’s time consuming to design your own chips, to design, and make, your own wireless modems.
One thing I don’t understand, for the life of me, is why Renesas? Why not Qualcomm? Nokia and Qualcomm may not have the most beautiful relationship in the industry, but what’s dinky little Renesas going to pump out? The goal, at least from my perspective, of this purchase is for Nokia to enable Renesas to built a system on chip platform, much like Qualcomm does with their Snapdragon processor, and become a leading player. It’s why ST and Ericsson merged. It’s why Texas Instruments is getting no love. It’s that deep level of integration, and convenience of having one customer to rely on for silicon that brought Qualcomm to where it is today.
A quick fact check via Bloomberg shows “Dinky little Renesas” has 6x the Market Cap of Qualcomm:
Maybe thesse extra details via Wikipedia would help shed some light on this ‘not-so’ houshold name:
So, as noted on the Wikipedia profile below, clearly Renesas is a worthy player and would suggest it rather unlikely that Nokia would seriously consider parting out such a critical component to Qualcomm. Certainly the NEC, Hitachi and Mitsubishi folks have done plenty of internal bits with Nokia over the years and this move builds on that trusted relationship.
Renesas Electronics Corporation is a Japanese semiconductor manufacturer and is the world’s number one supplier of microcontrollers (MCUs) and a supplier of advanced semiconductor solutions including microcontrollers, SoC solutions and a broad range of analog and power devices.
Business operations began as Renesas Electronics in April 2010 through the integration of NEC Electronics Corporation and Renesas Technology Corp., with operations spanning research, development, design and manufacturing for a wide range of applications. Headquartered in Tokyo Japan, Renesas Electronics has subsidiaries in 20 countries worldwide.
According to consolidated Gartner published data Renesas Electronics is the 3rd largest semiconductor company in the world.
Major stockholders and ownership ratio of Renesas Electronics Corporation are as follows:
NEC Corporation = 33.97%
Hitachi, Ltd. = 30.62%
Mitsubishi Electric Corp. = 25.05%
Nokia licensed its baseband processing technologies to Renesas in 2009 and has been developing baseband processors in collaboration with Renesas. On the other hand, Renesas has been providing semiconductors for mobile phones such as power amplifiers to Nokia. It seems that such business relationship led to the buyout.
“For baseband processing technologies, it is very important to accumulate verification data concerning connectivity,” said Hideaki Chaki, senior vice president and vice president of the 2nd SoC Business Unit of the company. “It is not easy to enter the market just because there are standards. If we tried to enter the baseband processor market from scratch, it would cost 10 times more (than the US$200 million), not to mention the long time we would have to spend.”