SAN FRANCISCO -- Broadcom ( BRCM) unveiled its latest weapon in its quest to become a player in the market for cell-phone chips. And coming on the heels of recent partnership agreements with handset makers Nokia ( NOK) and Samsung, Broadcom's move appears to be gaining some momentum. The Irvine, Calif., company provided details Monday on a new chip that incorporates a slew of features into a single chip for handsets that will run on the most advanced wireless networks. Broadcom said it believes it had at least a one-year head start over the competition in delivering this kind of functionality and predicted the product will help it reach its goal of grabbing between 10% and 15% of the massive cell-phone chip market by the end of 2009. "We are accelerating the rate of innovation and widening our technology leadership," Yossi Cohen, manager of Broadcom's mobile platform group, said in a conference call to discuss the news. Shares of Broadcom were recently up $1.27, or 3.2%, or $1.27, at $41.30. Broadcom's integrated chip is similar to what Texas Instruments ( TXN) has done with its lo-costo and e-costo chips, which combine a phone's typically separate radio transceiver and baseband processor onto a single piece of silicon. But Broadcom claims to have produced the first version of an integrated chip that supports the higher-speed third-generation cell-phone networks being developed in many parts of the world. The chip also supports Bluetooth connectivity and FM radio, and it features a separate
application processor to run operating systems such as Windows Mobile, Linux and Symbian.
This integration lowers the bill of materials of components for cell-phone handset makers, while reducing the physical space needed to accommodate a device's internal electronics, fostering sleeker handset shapes and designs. A TI spokesman said the company has its own 3G system-on-a-chip in development but wouldn't provide details on when it expects the product to be available. TI has already shipped tens of millions of integrated lo-costo chips, according to the company. Broadcom is one of several chipmakers, including Marvell Technology ( MRVL), taking on incumbents like TI and Qualcomm ( QCOM) in hopes of getting a piece of the billion-unit-a-year cell-phone market. So far, Broadcom appears to be making some headway. In August, the company announced
a deal to provide certain types of cell-phone chips to Nokia, the world's No. 1 maker of handsets. And earlier this month, Broadcom said that its chips will be available in Samsung's 3G cell phones. American Technology Research analyst Shaw Wu says the new product furthers Broadcom's push into the cell-phone market and plays on the integration skills that have served Broadcom well in other markets such as networking and DSL. But he noted that the timing of the announcement is curious, given that Broadcom doesn't anticipate the product will be commercially available until 2009. "What's really interesting is they're pushing the revenue out until 2009. So it doesn't seem like there's any near-term opportunity," says Wu. Of course, Broadcom may have more than financial goals in mind. As the new kid on the block in the cell-phone market, Broadcom bears the burden of proof that it has the chops to compete and persevere. By announcing its product at this early stage, while Broadcom still has a clear lead over its competitors, the company can make up for its newcomer status by building the perception of itself as an innovator in the field. How much revenue the chip will ultimately translate into for Broadcom is almost beside the point. In the contest for credibility, Broadcom is scoring points.