With the mobile phone market shifting to 3G, "It did not make sense to offer a 2G chip now," Philippe Geyres, ST's executive vice president, said here at the 3GSM World Congress. The cancellation is one of Geyres' first significant decisions since taking the helm last fall of a restructured ST organization that combines digital consumer electronics and wireless businesses.

Geyres added that ST has now "completely redirected the company's R&D efforts on wireless LAN chips to the cellphone market."

Programs ST killed include a joint project with Texas Instruments to develop CDMA chip sets originally developed with Nokia. The plan, announced in May 2003, was to market the chip sets to handset manufacturers worldwide for cdma2000 1X and 1xEV-DV (1x evolution for data and voice) mobile Internet handsets. Geyres said, "We stopped our efforts because the CDMA chip set market, outside of Nokia, simply didn't exist."

Geyres justified the moves, described as streamlining the company's wireless business, as necessary for seeking new opportunities. Those include acceleration of ST's development efforts in Bluetooth, wireless LAN and DVB-H (Digital Video Broadcast " Handheld). Also planned is introduction of its Nomadik processor as part of a mobile phone platform integrated with software stacks and key peripherals rather than as a standalone application processor.

Will Strauss, resident of market researcher Forward Concepts (Tempe, Ariz.), called ST's move to abandon 2G GSM modem development "a good business decision." He added, "They were too late."

Intel Corp. has also abandoned its GSM/GPRS development, said Strauss, focusing instead on 3G modem development. The GSM/GPRS market in 2006 will be "flat at best or going down." Strauss said, "The next phone everyone is going to buy will be a UMTS (3G) phone."

It remains unclear how ST plans to move forward in the new generation of mobile phones without a significant presence in the 2G or 3G baseband ASSP markets. The cost of developing a 3G modem and fully qualifying it for interoperability remains a daunting prospect. Competing with Nokia, Qualcomm and Freescale will be a struggle for ST, observers said.

Geyres stressed that ST has worked with customers on the development of 3G baseband ASIC. "It's real and we have accumulated significant know-how on it," he added.

Unanswered is whether ST plans to offer a 3G baseband modem ASSP and when it would be ready. Geyres acknowledged that if market demand emerges for the integration of a 3G modem with ST's Nomadik processor, "it is an issue we need to solve."

While noting that ST has not yet devised a detailed 3G baseband strategy, Geyres said the company is currently weighing a number of options. They include "partnerships with our competitors, acquisition of blocks from third parties or getting partial protocol stacks." Geyres added, "We still have the time to make up our mind."

By: DocMemory
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