Nokia has completed the sale of its wireless modem business to Renesas Electronics Corp. for $200 million and will transfer 1,100 workers to the Japanese company.
The top cellular phone maker said on Nov 30 that Renesas will now assume full ownership of Nokia’s wireless modem unit, which has been responsible for developing its technologies for LTE, HSPA and GSM standards.
Nokia said the transfer includes wireless modem technology standards that have been used in billions of handsets worldwide.
In preparation to receive the Nokia modem business, Renesas Electronics completed its plan to spin off its Mobile Multimedia Business Division by transferring the business to a new consolidated subsidiary – Renesas Mobile Corp. – effective Dec 1 2010. The Nokia modem resources from the acquisition will be added to the Renesas Mobile spin-off, which offers system-on-chip (SoC) products for mobile devices and car navigation systems.
The spin-off allows Nokia to focus on its key business, which is the design, manufacture and sales of its handsets. The establishment of Renesas Mobile enables Renesas to build a global business specializing in the mobile multimedia SoC business with streamlined management that it hopes will allow faster time-to-market, which is critical in the mobile segment. This move is one key aspect of Renesas’ strategy to expand its global business. Also, the addition of Nokia’s modem business complements Renesas’ existing business in applications processors and RF.
Advice For Renesas:
For Renesas Mobile, they will likely have significant business remaining at Nokia, the leading handset vendor, for the next several years with the resources to support it. Renesas should ensure that they support Nokia well to protect, if not grow, its share of the Nokia business. Renesas is strong in the Japanese market, but the Japanese market is a small percentage of the total world demand. In addition to Nokia and NTT DoCoMo, Renesas has been making some strides in increased business at Samsung and RIM as well. They will need to continue to grow these key accounts and try to expand into others as well. They need to ensure they have the key applications support near their target customers as the wireless business is very support intensive and requires good applications and program management resources to ensure timely delivery of solutions and qualification in the handset and on carrier networks. Finally, the purchase of Nokia’s baseband unit allows for further integration of the wireless chipset – this is key as it allows Renesas to begin integrating the transceiver into the baseband IC as has been the trend lately. By such integration, Renesas will be able to fend off some competitors who lack the whole solution.
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