Samsung Snubs Qualcomm, Builds 4G Chips

logo3Samsung Electronics is making its own WiMAX and LTE baseband chips for wireless handsets, according to an article in EETimes. The move by the Korean electronics maker shows how much opportunity it sees as the wireless industry transitions to 4G, and the fortunes of the biggest wireless chipmakers shift. Samsung has built its own application processors (one is inside the iPhone), and has extensive memory chipmaking operations, including a fabrication plant in Austin. It also is one of the top handset makers in the world, using chips from Qualcomm, Infineon and Broadcom.

By developing its own wireless baseband chips, Samsung is moving into territory owned by the No. 1 wireless chipmaker Qualcomm, which owns much of the intellectual property around the 3G CDMA standard. One of the reasons Samsung said it would develop its own LTE and WiMAX chips is to eliminate some of the royalty payments it makes, and thus reduce the costs of its handsets — a direct jab at Qualcomm.

Qualcomm owns less IP around WiMAX and LTE (although any handset will also need to communicate with 3G standards for quite some time). Samsung’s entrance into the market also takes advantage of the departure of two other players. The second-largest chip provider in that market, Texas Instruments, said in October it would exit the wireless baseband business (although it is making custom 4G chips with Motorola for handsets). Also this year, Freescale said it would sell its handset business.

The handset chip business has become more competitive, and as Qualcomm starts to lose some of its IP muscle, that will only continue. Samsung’s experience fighting it out in the cutthroat world of memory manufacturing may give it an edge here — although getting customers other than those of Samsung’s handset division might be a challenge.

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