Wed, Jul 25, 2001 page21

• Motorola to sell components to rivals

  MOBILE PHONES The US-based giant, which already sells cellphone parts and some chips, will market a complete set of components in the first half of next year

  • BLOOMBERG
  • • 
    • 
    • 

  Motorola Inc, the second-biggest mobile-phone maker, said it will begin marketing a full line of cellphone chips to rivals as the company tries to revive fallen semiconductor sales.

  The company, which sells cellphone parts and some chips, plans to offer a complete set of components beginning in the first half of 2002. Clients, which may include smaller phone makers in places such as China and Japan initially, would develop their own screens, interfaces and cases, Motorola said. Orders and details such as prices weren't disclosed.

  "We are perhaps one of the very few, maybe the only, company that could produce the entire solution from antenna to the microphone and everything in between," said Peter Shinyeda, a corporate vice president in Motorola's semiconductor division.

  Companies would be able to make phones "faster, cheaper and perhaps more efficiently than they can today," he said.

  Chief Executive Christopher Galvin is trying to restore profit at Motorola as demand slumps for wireless equipment and chips. The company, whose semiconductor rivals include Texas Instruments Inc and Conexant Systems Inc, expects chip sales to fall this quarter and to rise 5 percent in the fourth quarter from the third.

  Selling to rivals may cause tension between Motorola's mobile-phone and semiconductor divisions if demand rises, an analyst said.

  "If it's done properly, it can probably help both operations be more successful," said Stan Bruederle, chief analyst for wireless semiconductor applications at market researcher Gartner Dataquest.

  Motorola expects the strategy to generate a ``few billion'' dollars in extra sales within two to four years, Shinyeda said.

  The company had a first-half pretax loss of US$805 million in the semiconductor business as sales dropped 30 percent to US$2.73 billion.

  Motorola's second-quarter loss was US$759 million, or US$0.35 a share, compared with net income of US$204 million, or US$0.09, in the year earlier period, it said July 11. The company has cut debt and plans to eliminate 30,000 jobs this year.

  The Schaumburg, Illinois-based Motorola saw its shares decline US$0.45 to US$18.05 on Monday. They had fallen 51 percent in a year, while the Standard & Poor's SuperCap Communications Equipment Index, which includes Motorola, had fallen 78 percent. The stock had rebounded, rising 76 percent since April.

  The company forged the last link in the new strategy when it licensed microprocessor patents in December from ARM Holdings Plc, Europe's biggest chip designer, Shinyeda said. Motorola sells other components to mobile-phone makers such as larger rival Nokia Oyj.

  Motorola has beaten rivals such as Nokia to market with the first phones for General Packet Radio Service, which offers faster Internet access on upgraded networks that run on the widely used Global System for Mobile Communications standard.

  Parts for making a working combination GSM/GPRS phone are the first that Motorola plans to sell under the new strategy.

  The company will attempt to sell full chipsets to Nokia, which has more than double the market share, Shinyeda said.

  To win Nokia as a customer, Motorola would need to show "incontrovertible evidence that it's a better product than what they're using today," said another Gartner Dataquest analyst, Bryan Prohm, who follows the wireless-phone market.

  The strategy may cause tension between Motorola's chip and phone businesses as the semiconductor unit supplies similar products both to customers and to the company's own production line, or if manufacturing capacity drops and the company must decide whom to supply, analyst Bruederle said.

  Customers Motorola may try to sign for the chip set orders include smaller or less experienced phone makers such as Acer Communications & Multimedia Inc and GVC Corp of Taiwan and Samsung Electronics Co of South Korea.

  The more successful Motorola's initiative, "the more they are setting up their own handset unit for stiff competition," said Joe Laszlo, an analyst at researcher Jupiter Media Metrix Inc. That may mean the company "has less and less reason to stay in the handset manufacturing business over time."

  For your information

  Time for a change

  * Motorola's second-quarter loss was US$759 million, or US$0.35 a share, compared with net income of US$204 million, or US$0.09, in the year earlier period. * The company has cut debt and plans to eliminate 30,000 jobs this year.
• Most Popular

  • 1

    Palmeiras hopes for club cup win

  • 2

    Taiwan to see nine extended holidays in 2026

  • 3

    Pegatron ranks last in Greenpeace report

  • 4

    Taiwan blacklists Huawei and SMIC

  • 5

    Ma Ying-jeou’s forum speech regrettable, MAC says