Motorola and Bird, a top handset supplier in China, use highly integrated chip sets from Texas Instruments and Infineon, respectively. The handsets use fewer than 10 chips. The number of small active and passive discrete devices approach 150 per handset, according to Portelligent.

"The reduction in hardware cost and component counts have been accomplished primarily through the use of highly integrated chipsets," said Jeff Brown, principal analyst at Portelligent. "Reductions in die area for both memory and non-memory IC components and reduced RF passive counts are contributing to the lower hardware BOMs realized by both Motorola and Bird," he added.

Portelligent found two novel aspects of the Moto phone. One was its use of a flexible display from startup E-Ink Corp.. The display delivers high contrast images, readily readable in daylight, however it is limited to a handful of canned images.

"This is the first time we have seen this type of display in a phone, let along a low-end model," said Brown. "It is more rugged due to the flexibility, and it adds a bit of a cool factor to it," he added.

In addition, the Moto phone uses only one memory chip, a 2Mbyte NOR flash device. The handset uses no SDRAM or PSRAM popular in most phones.

"It's rare we see a single piece of memory on a handset." Brown said.

The latest handsets effectively mark a third generation of phones aimed at emerging markets. The second generation saw models with bills of materials that dipped below $30. They included the Moto C113 and C113a phones as well as a model from Nokia. Those phones typically had about 14 chips and about 200 small active and passive discretes.

The GSM Association sparked the first-generation designs with its Emerging Market Handset Initiative launched at 3GSM in February 2005. The Motorola C114 and C115 phones responded to the call with phones costing less than $40. The C115 had a bill of materials cost of just $34 using 13 ICs and 284 discretes.