Singapore, World Biz  |  JANUARY 13, 2016 7:22AM

Qualcomm, TDK in RM13 bil radio-chip JV

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TDK CorpQualcomm Inc, the biggest maker of chips that run smartphones, is teaming up with Japan’s TDK Corp to create a Singapore-based joint venture that will make components for the growing market for radio-frequency chips used in handsets, robotics, cars and drones.

Qualcomm will invest about US$1.2 billion (RM5.3 billion) and TDK will carve out its design and manufacturing assets, plus related patents, into the endeavor, the companies said in a statement Wednesday. The US chipmaker will own 51% of the new company, which will be called RF360 Holdings, and have the option to acquire TDK’s stake at a later date. The total transaction is worth US$3 billion (RM13.2 billion).

The market for the electronic components, which help convert radio waves into signals that are then turned into data by semiconductors inside electronic devices, will grow 13% a year to about US$18 billion by 2020, the partners said. Teaming up with Tokyo-based TDK, which specializes in filters, will allow Qualcomm to offer modules that contain all of the components needed by smartphone makers in a single, comprehensive package, according to Cristiano Amon, the head of Qualcomm’s chip division.

File photo of visitors walking past the Qualcomm stand at the Mobile World Congress in BarcelonaAmon is seeking new growth areas for the company’s chips as Qualcomm faces more competition in its core modem and microprocessor business, slowing revenue growth. The San Diego- based company, which last week announced that Volkswagen AG’s Audi unit will use its processors in vehicles, is also trying to break into the computer server market and get its chips into a variety of devices including drones and robots.

“You have to deliver the economies of scale to the industry,” Amon said. “Providing baseband all the way to the antenna is going to provide significant growth.”

Increasing mobile data speeds has made it more difficult to bring radio signals into phones, a task that’s proving challenging for handset makers to handle through discrete components. Modern smartphones have to deal with about 49 different frequency bands compared with just 3 for early data- capable phones more than a decade ago. By solving that complexity, Qualcomm will help makers of new categories of devices add cellular functions more quickly, Amon said.

— By Ian King

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