Signal Processing DesignLine Blog
Nokia has become so big that it can determine which companies become top-tier vendors, and which become also-rans.
It's hard not to be impressed with Nokia. Despite mediocre market growth, the company shipped 100 million phones in the second quarter, an incredible growth of 20 million units over the second quarter of 2006. With this growth, Nokia has captured nearly 40 percent of the phone market. On top of all that, the company is now tied with Dell as the world's second-largest chip consumer.
With its powerhouse position, any move Nokia makes sends waves through the semiconductor market—and Nokia has been making lots of big moves lately. The company recently decided to end in-house chip development and stop relying exclusively on Texas Instruments for its handset technology. This move has created a big opportunity for chip vendors, and has already led to big wins for Infineon in low-end phones and for Broadcom and ST in next-gen 3G phones.
These moves have put Nokia in the position of a "kingmaker" in the DSP industry. Indeed, Nokia's moves are one of the main reasons we are seeing a major realignment among baseband vendors. It's certainly possible for chip vendors to survive without a Nokia contract, but it's getting hard to see any company remaining a top-tier vendor unless it has a deal with the handset maker.