They announced last Tuesday they would sell their wireless modem business to Japan’s Renesas Electronics, a maker of handset components based in Tokyo, for 200 million.
The Nokia has suffered major net losses and decrease in sales for the last three years due to their heating competition with China’s Huawei and ZTE. And with this decline in marketability, Nokia finally decides to sell their wireless modem business to Renesas Electronics, a maker of handset components based in Tokyo.
According to Pal Zarandy, a senior partner at Rewheel, a mobile industry analysis firm in Helsinki, Finland, said that the prices of the wireless broadband modems had a dramatic drop as it dropped from 120 Euros in 2007, down to a staggering 90 Euro decrease of 30 Euros in the present.
Most European mobile operators have already decreased the production of these wireless broadband modems, which are usually U.S.B. sticks that are plugged in to laptops. This is to give way for the upcoming mobile broadband models so as to attract more consumers to buying the said new product.
“The U.S.B. market has become a very low-margin business. Nokia has apparently decided it is better to concentrate on more profitable aspects of the business,” as stated by Zarandy.
Nokia said that 1,100 employees from Finland, Denmark, India and Britain would be transferred to Renesas Electronics as part of the transaction. The deal will be completed by the fourth quarter.
The deal would be part of a continuing partnership to innovate the technologies for the two trendiest wireless broadband standards namely Evolved High-Speed Packet Access and Long-Term Evolution, as described by Nokia.
This deal allows Renesas Electronics to improve the quality of wireless broadband modems and wireless mobile phones of Nokia. With evolution of handset manufacturing, there has been an inclusion of wireless modems in multifunctional chipsets along with the phone engine, processor, software, and power manager.
Instead of producing their own chipsets, Nokia bought chipsets from other manufacturers such as Broadcom, Qualcomm, Infineon, a German chipmaker, and STE, a joint venture of STMicroelectronics of France and Ericsson, based in Geneva. This was according to the latest filing with the Securities and Exchange Commission.
