Nokia's Selection of New IC Solution Vendors and Its Implications for the Mobile Phone IC Industry

On August 8, 2007, leading international mobile phone vendor Nokia announced that it was adjusting its long-standing IC development model based on in-house R&D to make greater use of technology licensing and multi-sourcing. This indicates a concrete manifestation of a change in Nokia' s strategy that has been forced on the company by changes in the mobile phone industry environment. Nokia has been collaborating with Texas Instruments for some years now; it has now also begun to adopt IC solutions supplied by STM, Broadcom, and Infineon. A few days after Nokia' s announcement, on August 20, Infineon revealed that it was acquiring LSI' s mobile products division for 330 million Euros. These two announcements have sent shockwaves through the mobile phone IC market. This report will examine the strategic thinking behind Nokia' s change in strategy, and will consider how the new strategy will affect the competitive balance in the global mobile phone IC industry.