Nokia inks Infineon deal, no longer exclusively dating TI

German chip maker Infineon Technologies AG crowed yesterday that it will supply Nokia Corp. with baseband and RF chips for the handset vendor’s entry-level phones in GSM markets.
Details of the deal were not disclosed, so the relative impact of the move to Texas Instruments Inc., formerly Nokia’s exclusive supplier for entry-level handset chips, is difficult to gauge.
The deal reflects efforts by handset vendors to diversify their component suppliers, particularly in the semiconductor area, the heart of a phone’s functionality. Motorola Inc., for instance, recently announced that it would use products from TI, Qualcomm Inc. and Freescale Semiconductor.
Analysts generally agreed with TI’s view, expressed at the chip maker’s late-January earnings call with analysts, that any loss of business with current customers seeking to diversify suppliers could be made up by new relationships with other customers.
“We expect the relative bad news for Texas Instruments at Nokia to be offset by the good news at Motorola,” Ross Seymore at Deutsche Bank wrote in a note to investors.
Analyst Allan Mishan at CIBC World Markets, in an apparent reference to a signature line from the television comedy series Monty Python, called the impact on TI a “flesh wound.”
Investors on Wall Street sent Infineon’s stock up as much as 11 percent yesterday in reaction to the news, while TI’s stock was down just a little over 1 percent.
Infineon has about 42,000 employees worldwide with offices in San Jose, Calif.; Singapore; and Tokyo. It earned about $10.3 billion in revenue in fiscal 2006. The company does business with Samsung Electronics Co. Ltd. and LG Electronics Co. Ltd. and had enjoyed strong sales with its former parent, Siemens, before and after the latter sold its handset business to BenQ Mobile. BenQ/Siemens, however, has shuttered its businesses in Europe and Latin America and retreated as BenQ Mobile to Asian markets. That move led Infineon to cut 400 jobs-less than 1 percent of its workforce-in October.