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Sat, Jul 26, 2003 - Page 12 News List

STMicroelectronics seeks to sell chips to Asian cellular-phone manufacturers


STMicroelectronics NV, Europe's largest semiconductor maker, is in talks with Asian cellular phone makers about supplying high-speed chips that allow handset users to take and send photographs and videos, executives said.

The company is trying to win a contract to supply its chips to a ``major'' Asian handset maker, said Aldo Romano, head of the company's telephone, computer and automotive products division, on the sidelines of a press conference in Milan.

He declined to say which companies STMicroelectronics was talking to or when a supply contract may be announced.

STMicroelectronics in May said it was working with rival Texas Instruments Inc, the world's biggest maker of microchips for mobile phones, to design semiconductors that will allow handset makers to include a broader range of capabilities, such as sending and storing video or music clips, in their phones.

That will put Geneva-based STMicroelectronics in competition with Qualcomm Inc, whose chips are the basis of mobile phones used by more than 145 million people, mainly in the US and Asia. STMicroelectronics and Texas Instruments are collaborating on chips using code-division multiple access technology, or CDMA, a technology developed by San Diego-based Qualcomm.

STMicroelectronics and Texas Instruments are cooperating with Nokia Oyj, the world's largest mobile-phone maker, to incorporate the new chips in its phones and begin selling them this quarter, they said in May.

The new chips will be available to other manufacturers for use in their handsets by the second half of next year, Romano said.

Qualcomm is trying to spread its dominance in sales of the chips it created to markets outside the US and Asia. by targeting the European market for so-called third-generation, or 3G, phones, chairman and chief executive officer Irwin Jacobs said in an interview earlier this month. CDMA technology is currently not used in Europe.

Expanding in Europe will help San Diego-based Qualcomm grab 50 percent of the worldwide market for phones based on wideband code division multiple access technology, or WCDMA, Jacobs said.

That new technology will be the basis for the 3G services European operators are introducing.

STMicroelectronics doesn't expect that market to develop for "many years" and doesn't want to wait for 3G to reach Europe to challenge Qualcomm, Romano said.

"We don't want to compete with Qualcomm in Europe," he said. "We want to compete with them worldwide, in Europe and Asia."

The company will present its strategy to compete in the CDMA market in September, Romano said.

Pasquale Pistorio, chairman and chief executive of STMicroelectronics, today said the company plans to expand beyond its the base of largest customers and increase sales to other companies.

The chipmaker currently gets about 20 percent of total sales from Nokia.

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