Chip firms pin their hopes on mobiles

 

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By Reuters

Posted on 18 Feb 2009 at 08:21

Global chipmakers are hoping that increased sales of mobile devices will offset a terrible decline in traditional PC processor sales.

Worldwide shipments of PC processors fell more than 11% in the fourth quarter, but netbook sales are expected to more than double this year to about 35 million units, according to analysts.

Intel, the world's biggest chipmaker, expects to sell at least 50% more of its Atom chips for netbooks and other mobile internet devices this year than it did in 2008, according to Anand Chandrasekher, head of Intel's ultra-mobility group.

Intel's revenues from Atom chips rose 50% to $300 million (£211 million) in the fourth quarter. Overall company sales fell 23% to $82 billion as the chip industry struggles through the downturn.

Netbooks have seen explosive growth in the past year and are still a bright spot for computer makers, although growth may come at the expense of more expensive PCs.

US chipmaker Freescale, which began making chips for netbooks last month, plans to expand its offering to include chipsets for Google's Android operating system by next quarter.

The privately held company spun off from Motorola in 2004 will also collaborate with wireless technology companies Wavecom and Option to make higher-end netbooks offering faster, third-generation connections.

Freescale expects the amount of netbooks sold this year to double to about 30 million, targeting casual, young users in developed markets.

As lines between portable PCs and increasingly sophisticated mobile phones start to blur, a string of companies hope to tap into growth in the smartphone market - expected to be another niche growth market in the tech sector in 2009.

It is predicted to grow by 10-20%, even as the global financial crisis saps demand for gadgets and hurts the bottom line of many technology companies.

Such predictions drove Taiwan's Acer, the world's third-largest PC brand, to enter the smartphone market. Acer unveiled its first eight models at the Mobile World Congress this week and says it plans to break into the top five of smartphone makers in five years' time.

However, many analysts point out that the sector is already crowded and new entrants may find it difficult to break into the smartphone supply chain.

That is not an issue for top mobile phone maker Nokia, already a global player in the market. But an option to lower production costs led Nokia to bury the hatchet with longtime adversary Qualcomm.

In a deal that marks the first time Nokia will use Qualcomm chipsets in its 3G phones, it gives Qualcomm access to a major share of the smartphone market, while it enables Nokia to further lower production costs. The companies have fought for years over intellectual property rights and royalty payments.

The agreement also comes against the backdrop of an ailing mobile phone market, with 2009 sales set to drop as consumers rein in spending on new gadgets due to the economic recession.