Fujitsu, NTT DoCoMo and NEC to form smartphone chip venture

The Japanese firms said they will invest US$1.3 million in the new company to build chips combining wireless modems with other functions

Japanese electronics heavyweights Fujitsu and NEC, together with the country's largest mobile operator NTT DoCoMo, said Wednesday they will form a new joint venture to build and sell wireless chips for smartphones.

The venture, Access Network Technology, will focus on creating chips that combine wireless modems with other functions, cutting the number of chips needed to make a phone and reducing reliance on outside vendors. The companies will initially develop products for their own use, but will target international sales in the quickly growing smartphone market.

In Japan, mobile operators have long dictated what specifications and functionality manufacturers build into the phones that run on their networks, although their control has loosened somewhat with the recent influx of foreign smartphones. Fujitsu and NEC currently work with NTT DoCoMo on a contractual basis to develop the chips for their handsets, and the deal formalizes the long-standing arrangement.

"The new company will create a stronger corporate operation, compared to current cooperative development," said Fujitsu spokesman Takashi Koto.

The new start-up is to begin operations this month. It will have initial start-up capital of ¥100 million (US$1.28 million) and will be 62.3 percent owned by Fujitsu and its chip subsidiary, with DoCoMo and NEC carrying smaller shares.

The new venture will probably outsource the actual chip production to a fab, or fabrication plant, as is common in the industry; Koto said.

Access Network Technology will have 85 employees and be based in Kanagawa Prefecture, just south of Tokyo.

In February, the companies, along with Panasonic, said in a separate announcement that they had developed a chip and supporting software that can handle a large variety of wireless protocols, including high-speed LTE (Long Term Evolution), GSM, and W-CDMA.

Unlike many global operators, DoCoMo is eager to stay involved in creating and selling chipsets that work with LTE, which the operator originally proposed as a standard. The high-speed specification, mainly used for data transmission, is gradually becoming the global standard.

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Jay Alabaster

IDG News Service

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