Due to its recent agreement with Nokia, Qualcomm Inc. is likely to solidify its lead in the global market for mobile-handset baseband semiconductors, according to iSuppli Corp.

Based on iSuppli’s preliminary estimate, Qualcomm in the fourth quarter accounted for 40.6 percent of worldwide revenue from shipments of mobile handset baseband semiconductors, up from 36.3 percent in the third quarter. Qualcomm expanded its lead over the No. 2 supplier, Texas Instruments Inc., to 20.9 percentage points, up from 14.1 points in the third quarter.

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Qualcomm Inc.

Nokia and Qualcomm this month announced they will collaborate on the development of advanced UMTS mobile devices, initially for the North American market. For this effort, the companies will utilize Qualcomm's 3G Mobile Station Modem (MSM) MSM7xxx-series and MSM8xxx-series chipsets that provide processing and mobile broadband capabilities.

“Until now, Nokia and Qualcomm have had frosty relations as they battled over intellectual property rights and royalty payments related to 3G technology,” said Francis Sideco, senior analyst, wireless communications, for iSuppli. “Furthermore, Nokia has used custom 3G silicon from Application Specific Integrated Circuit (ASIC) powerhouses, STMicroelectronics and Texas Instruments.

However, with 3G technology maturing, there is less differentiation to be had from custom ASIC solutions, making Qualcomm’s standard silicon more attractive as it allows Nokia to focus on enhancing handset designs and service offerings to improve the consumer experience.

This can only be considered a positive development for Qualcomm’s position in mobile handset baseband semiconductors and another challenge to overcome for its competitors.”

Nokia now can adopt a complete Qualcomm solution for its 3G phones, including the modem, baseband and Radio Frequency segments, simplifying the design of such products, Sideco added. Furthermore, it will allow Nokia to concentrate more on consumer-oriented innovations like the user interface, services, applications and the industrial form factor. Furthermore, by adopting Qualcomm’s standard silicon, Nokia will be freed up to focus on design and Intellectual Property (IP) related to ASICs compatible with next-generation 4G standards.