Freescale offers up handset chip business
In line with its goal to sharpen the company's strategic focus on growth markets and its key leadership positions, Freescale Semiconductor announced that it will explore strategic options for its cellular handset chipset products business and the company intends to complete a sale, joint venture agreement or other transformation in the coming months.
The company's cellular handset products business includes baseband processors, RF transceivers, power management/audio, software and platforms for the cellular handset market.
The company also announced it has updated its arrangement with Motorola whereby Motorola agreed to provide certain consideration in exchange for eliminating their remaining minimum purchase commitments.
Since it was originally spun off Motorola, Freescale has been dependent on the US handset vendor for driving its handset semiconductor sales, though Freescale has attempted to further diversify its client pool by adding customers such as Research in Motion (RIM) and Sagem in recent years.
However, despite the handset industry being marked by increased consolidation, Motorola has been losing market share recently. According to Strategy Analytics, Motorola's share of the global handset market stood at only 9.5% in the second quarter of this year, down from 13.7% one year earlier amid falling shipments of 20% from the previous year. Moreover, Motorola's falling market share has come as the top-five handset vendors – Nokia, Motorola, Sony Ericsson, Samsung Electronics and LG Electronics – have grown their overall share of the global handset market from about 60% in 2005 to more than 80% in 2007.
There has also been consolidation among chipset providers, with the number of design houses falling to less than 10, down from as many as 40-50 previously. Since last year, LSI Logic has exited the market and STMicroelectronics and NXP have teamed up in an attempt to increase their competitiveness.
Freescale chairman and chief executive officer Rich Beyer indicated that in the cellular handset chipset market, it has become evident that business needs considerably greater scale in order to achieve a position of market leadership and long-term success. Freescale believes that the investment required to achieve that scale will be better served extending product portfolios where Freescale is a leader and expanding our application expertise in sensors, analog, power and multimedia processing.
The company stated it will increase investments in the automotive and networking markets where it is the global leader in automotive microcontrollers, communication processors and radio frequency (RF) integrated circuits (ICs) technology. It will also increase its efforts and investments in the industrial and consumer markets that utilize Freescale's microcontrollers, microprocessors, application-specific processors, analog, power and sensor ICs.
The company will also accelerate its investments in its analog/power product families to increase its penetration in automotive and industrial markets and to enter into selected high-growth consumer markets. Freescale indicated it intends to increase R&D funding to expand its processing, RF, sensor and analog power management expertise into new high-growth market segments like personal medical devices, smart energy metering and home networking.
Beyer was brought on board early this year to help propel the company forward and he noted in June during the Freescale Technology Forum (FTF) that he was reviewing the company's business and areas of focus the company would develop a strategic framework for growth within the next few months. Commenting now, Beyer stated that as the semiconductor market continues to consolidate, it is essential that Freescale maximize its investment on growth opportunities that enable it to extend its market leadership and to ultimately create shareholder value.
The company's cellular handset products business includes baseband processors, RF transceivers, power management/audio, software and platforms for the cellular handset market.
The company also announced it has updated its arrangement with Motorola whereby Motorola agreed to provide certain consideration in exchange for eliminating their remaining minimum purchase commitments.
Since it was originally spun off Motorola, Freescale has been dependent on the US handset vendor for driving its handset semiconductor sales, though Freescale has attempted to further diversify its client pool by adding customers such as Research in Motion (RIM) and Sagem in recent years.
However, despite the handset industry being marked by increased consolidation, Motorola has been losing market share recently. According to Strategy Analytics, Motorola's share of the global handset market stood at only 9.5% in the second quarter of this year, down from 13.7% one year earlier amid falling shipments of 20% from the previous year. Moreover, Motorola's falling market share has come as the top-five handset vendors – Nokia, Motorola, Sony Ericsson, Samsung Electronics and LG Electronics – have grown their overall share of the global handset market from about 60% in 2005 to more than 80% in 2007.
There has also been consolidation among chipset providers, with the number of design houses falling to less than 10, down from as many as 40-50 previously. Since last year, LSI Logic has exited the market and STMicroelectronics and NXP have teamed up in an attempt to increase their competitiveness.
Freescale chairman and chief executive officer Rich Beyer indicated that in the cellular handset chipset market, it has become evident that business needs considerably greater scale in order to achieve a position of market leadership and long-term success. Freescale believes that the investment required to achieve that scale will be better served extending product portfolios where Freescale is a leader and expanding our application expertise in sensors, analog, power and multimedia processing.
The company stated it will increase investments in the automotive and networking markets where it is the global leader in automotive microcontrollers, communication processors and radio frequency (RF) integrated circuits (ICs) technology. It will also increase its efforts and investments in the industrial and consumer markets that utilize Freescale's microcontrollers, microprocessors, application-specific processors, analog, power and sensor ICs.
The company will also accelerate its investments in its analog/power product families to increase its penetration in automotive and industrial markets and to enter into selected high-growth consumer markets. Freescale indicated it intends to increase R&D funding to expand its processing, RF, sensor and analog power management expertise into new high-growth market segments like personal medical devices, smart energy metering and home networking.
Beyer was brought on board early this year to help propel the company forward and he noted in June during the Freescale Technology Forum (FTF) that he was reviewing the company's business and areas of focus the company would develop a strategic framework for growth within the next few months. Commenting now, Beyer stated that as the semiconductor market continues to consolidate, it is essential that Freescale maximize its investment on growth opportunities that enable it to extend its market leadership and to ultimately create shareholder value.
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