Samsung boosts its own 4G wireless chip development

While other manufacturers are pulling back on chip development because of the bleak economy, Samsung is now stepping up its work on WiMAX and LTE so as to bring down its royalty payments -- and quite possibly, its financial risk.

To cut costs by saving on royalty payments to Qualcomm, Samsung is expanding its chip development activities for 4G WiMAX and LTE devices in both internal and external directions -- bucking current industry trends to "conservative" development.

In addition to collaborating with a wider pool of outside silicon suppliers, Samsung is expanding its own chip development activities around 4G wireless, according to published reports.

Samsung plans to support both the WiMAX technology now emerging from wireless providers such as Clearwire and the LTE technology slated for deployment by Verizon Wireless and AT&T a few years down the road, said Young Cho Chi, senior VP of strategic planning for Samsung's telecom division, during a recent talk in San Francisco.

The manufacturer's handheld division is reportedly already sampling its own mobile WiMAX baseband chip sets to engineers both inside and outside the company. The manufacturer is also working on baseband chip sets for LTE, as well as on multimedia accelerators.

Samsung had been gradually broadening its relationships with outside chip suppliers, anyway. After originally depending mostly on chipsets from Qualcomm, Samsung began using chips from Broadcom and Infineon last year.

Evidently, the Broadcom and Infineon chips use a software stack from Comneon that does not rely on Qualcomm's patents.

Samsung's expanded chip development activities come at a time when many other manufacturers are pulling back from these efforts due to downwardly revised analyst projections for the mobile market.

Earlier this month, for instance, iSuppli lowered its forecast of global mobile device shipment for 2008 from 10.4% for 2008 to 8.9%, for a grand total of 1.287 billion devices. The outlook for 2009 is gloomier, said Tina Teng, senior analyst, wireless communications, for iSuppli.

"A check in the channel shows that manufacturers are being conservative in their sourcing and component procurement activities, and they are making efforts to reduce inventory to maintain lean and efficient operations," according to iSuppli spokesperson Jonathan Cassell.

However, Chi said that Samsung hopes to lower the costs of its future 4G wireless devices -- a potential bright spot in an otherwise darkened economy -- while reducing its exposure to royalty payments through its ramped up internal and external activities around WiMAX and LTE.

Presumably, these efforts might also lessen Samsung's financial risk. In the 3G wireless arena, Qualcomm has gotten entangled in considerable legal wrangling, through patent and royalty battles with Broadcom and Nokia.