Texas Instruments Inc. says it is testing two new semiconductor chipsets that could mark the next step in making so-called third-generation mobile phones more affordable and widely available.
Officials were scheduled to announce Tuesday in Tokyo that Texas Instruments has tested a new and advanced chipset with Japan's NTT DoCoMo Inc. and expects phones with the new component to be on the Japanese market next year.
Analysts who were briefed by Texas Instruments said the new chipset, which combines a modem with an applications processor, was designed to improve the video performance of advanced phones. But they said it was too early to say whether the new product would vault Texas Instruments ahead of competitors that include Intel Corp., Renesas Technology Corp., Freescale Semiconductor Inc. and the semiconductor unit of Royal Philips Electronics N.V.
At the other end of the third-generation market, Texas Instruments was set to announce that it is testing a new processor designed to boost video performance and support cutting-edge phone functions such as 30 frames per second digital video and 3D gaming at a lower cost than previous chips. "The real significance is at the low end," said John Jackson, an analyst with the technology research firm Yankee Group. "Broad 3G adoption, especially in Europe, has been slowed by a lack of mainstream phones. TI is using its prowess as a fabricator to enable these phones to get into more mainstream price points - more bang, less buck."
Avner Goren, Texas Instruments' director of marketing for cellular systems, said the company's early approach to the high-end phone market was to build relationships with a few leading manufacturers, such as Nokia Corp. and Ericsson Inc. Now it is going after the mass market.
"We need to build a standard chipset that removes some barriers of entry for other players to enter the 3G marketplace," Goren said. He estimated that the company's new mid-market chip could be 10 percent to 30 percent cheaper than similar parts now in use.
Dallas-based Texas Instruments has been waiting a long time for the promise of higher revenue and profits from making processors for third-generation phones. Research firms such as International Data Corp. and Forward Concepts rank the company first in sales of several types of chips used in cell phones, such as application processors. The company, which has been helped by a close alliance with Nokia, claims that its chips are in more than half the wireless phones sold in the world.
Texas Instruments officials say their revenue from next-generation phone components this year is already more than $600 million. Goren said TI expects sales to top $1 billion next year - still a small but growing portion of the company's total revenue, which was $12.58 billion last year.
Shares of Texas Instruments fell 16 cents, to close at $32 in trading Monday on the New York Stock Exchange, on the high side of their 52-week range between $20.70 and $34.68.