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NEW YORK - Broadcom said yesterday it had developed an integrated third-generation (3G) high-speed wireless cell phone chip ahead of bigger rivals Texas Instruments and Qualcomm.
The announcement, sent Broadcom shares up as much as 3 per cent. Shares of Texas Instruments and Qualcomm both fell about 2 per cent after Broadcom said it developed a single chip with a baseband - the cell phone's main processor - and a radio receiver as well as FM radio and Bluetooth, a short-range technology used for wirelessly linking handsets to headsets.
Stifel Nicolaus analyst Cody Acree raised his price target for Broadcom stock, saying the new chip helped legitimise efforts by Broadcom, a small wireless player, to increase its share of the mobile phone chip market.
"This solution is the first of its kind at the 3G level," and appears to put it "at least several months" ahead of rivals such as Texas Instruments, Acree said in a note to clients.
Broadcom said the chip, which could put it up to two years ahead of rivals, was now available for customer testing. It said it expects the first phones using the chips to come on the market in 2009.
Broadcom said the chip would cost $US23 at high volumes, a price allowing it to "substantially" undercut rival offerings requiring multiple chips.
Stifel's Acree said the chip posed a competitive threat to other wireless chip makers including Infineon Technologies AG and privately held rivals NXP and Freescale.
Chip lead
Specifically, Acree said he expects Broadcom to use the chip to compete better against Qualcomm in South Korea, where large Qualcomm customers Samsung Electronics and LG Electronics are based.
Broadcom had already started to shift the balance of power away from bigger rivals such as Texas Instruments when Nokia Oyj announced it would buy chips from Broadcom as well as Infineon and TI, Nokia's biggest existing supplier.
On Oct 7 Broadcom said Samsung, the world's second-biggest mobile phone maker, had started to ship high-speed wireless phones using Broadcom chips.
In comparison to TI and Qualcomm, which each had about 20 per cent of the 2006 mobile phone chip market, Broadcom had a 1.4 per cent share, according to data from researcher iSuppli.
Broadcom said the chip should help the company achieve its target of increasing its share of the cell phone chip market to 10 per cent to 15 per cent by the end of 2009.
"We are very much on track to deliver on our stated goal," Yossi Cohen, Broadcom president of mobile platforms, told analysts on a conference call.
Broadcom and Qualcomm have been fighting increasingly bitter legal battles with one case that Qualcomm is appealing involving a government ban on the US import of some phones with Qualcomm chips found to infringe a Broadcom patent.
- REUTERS
