Texas Instruments Inc. announced Friday that it has formed a joint venture with four companies in China to co-develop next-generation cellular phones based on its digital signal processors (DSP) technology.
According to a memorandum of understanding signed by the various parties, TI (stock: TXN), Dallas, will form a joint venture to develop handsets for the Chinese market with ZTE Corp.; Xiamen Overseas Chinese Electronic Inc. Ltd. (Xoceco); Beijing Huahong IC Design Corp.; and Ningbao Bird Co. Ltd.
The project will be funded and supervised by China's state-run Ministry of Information Industry. TI will provide semiconductor components, including DSPs, analog chips, development tools, and technical consultation to help local OEMs build products for next-generation (2.5G) handsets.
"Both TI and our customers share the same vision in facilitating the development of adoption and application of the next-generation wireless standard for China," said Tom Engibous, chairman, chief executive, and president of TI.
"TI's expertise in DSPs optimized for wireless communications end equipment will allow the consortium and local wireless equipment manufacturers to offer leading solutions and capabilities," added Gong Zheng-jun, vice president of ZTE.
The deal gives TI an early jump in the terms of garnering design wins among China's fledgling OEMs. At present, China's cell-phone market is dominated by foreign OEMs.
But hoping to take market share away from the foreign suppliers, the China government is pushing a growing number of local OEMs to enter the nation's booming handset business.
On the chip side, meanwhile, foreign suppliers are gearing up for the China market. Motorola Inc. (stock: MOT), Schaumburg, Ill.; TI, Qualcomm Inc. (stock: QCOM), San Diego; and others are scrambling to develop relationships with China's fledging OEMs.
The stakes are high. China had 59.3 million mobile-phone subscribers in the first half of this year, but government figures show that number is projected to exceed 140 million by 2003.