The new handset deal between Nokia and Qualcomm announced last week at Mobile World Congress will see Qualcomm extend its lead in the mobile chip sector, says research firm iSuppli. Based on iSuppli’s preliminary estimate, Qualcomm in fourth-quarter 2008 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 second-placed supplier, Texas Instruments, to 20.9 percentage points, up from 14.1 points in the third quarter. iSuppli predicts this market share will increase following the Nokia deal. “With 3G technology maturing, there is less differentiation to be had from custom Application Specific Integrated Circuit (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,” said Francis Sideco, a senior analyst at iSuppli. “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 and Qualcomm announced last week that the new WCDMA-based handsets will be based on Nokia’s S60 software on the Symbian operating system using Qualcomm’s advanced Mobile Station Modem (MSM) chipsets. The first handsets are scheduled to launch in mid-2010 initially in North America. The deal marks the end of a long-running intellectual property rights and royalty payments legal battle between the two companies. According to iSuppli, Nokia’s recent decision to use chips from STMicroelectronics increased the chip-maker’s share of global broadband semiconductor revenue to 13.3 percent in 2008, up from 7 percent in 2007. “Whether Qualcomm enjoys a major market share bump like STMicroelectronics due to this Nokia deal remains to be seen, but the company is likely to realise gains from finally being able to partner with the world’s largest mobile handset brand,” Sideco said.