The chipmaker wants to increase it portfolio by entering the radio frequency market.
The Wall Street Journal reported on January 13, 2016 that Qualcomm Inc. plan to enter into a partnership with TDK Corporation, based in Japan. This deal between the two companies is expected to close somewhere in 2017 and will be worth $3 billion, payable over a time period of three years. This is a step forward by the chipmaker in an effort to exploit the growing market for radio-frequency.
According to the agreement between both the firms, they will together set up a new organization by the name of RF360 Holdings. The new firm will be a combination of the chipmaker’s Power amplifiers, in which the company specializes in, together with the filters of radio frequency provided by Japan’s TDK. Together they will develop a filter which is known as “RF front end modules”. This new holding firm will be owned at a ratio of 51:49 at first with Qualcomm, Inc. owning 51% of the stake. By the third year of the agreement, the technology company plans to own it completely.
For quite some time now, the American semiconductor company has dominated the broadband modem in a number of devices including the iPhone and other such smartphones. In recent years it has also made radio chips for antennas and amplifiers but has lingered on when it comes to providing filters. Filters are a major part of phones that allows it to tune into specific radio spectrums along with making calls and using mobile data. In order to fit in multiple markets, an increased number of filters are being used in smartphones nowadays.
As many as 49 filters are being used in a single smartphone and by the year 2020, they are likely to increase to over 100 filters in one phone, as stated by Christian Amon, the President of Qualcomm. The filter market it predicted to grow to about $12 billion by the year 2020 which is currently at $5 billion.
The once market leader Qualcomm has been a victim of increase competition in the chip-making market but with this collaboration it is expect to come out stronger both in the existing modem market as well as the RF Front end module market. The current market leaders of RF technology are Skyworks and Qorvo who have managed to make and invest billions of dollars in the innovation. These market giants have been providing wireless components to a number of customers as well as contributing to the Internet of Things.
Evidently, it will not be an easy task to get into the market because of tough competition but the way the company is currently handling its matter say a lot about how it will tackle the rivals.