Samsung Plans on Producing Its Own 4G Chips

According to the latest news on the Web, Samsung Electronics is working on its own WiMAX and LTE baseband chips meant for wireless handsets. The Korean electronics maker is said to be making this move as there is a great opportunity in the transition the industry is making towards 4G. Samsung has developed its own application processors (as the one that can be found inside the iPhone).

The company has extensive memory chipmaking operations, which also include a fabrication plant in Austin. Samsung Electronics is also known as one of the top handset makers in the world, and it uses chips from Qualcomm, Infineon and Broadcom.

Since it started to develop its own wireless baseband chips, Samsung entered an area that belongs to the world's first wireless chipmaker, Qualcomm, since the company owns a high percentage of the intellectual property around the 3G CDMA standard. Samsung decided to develop its own LTE and WiMAX chips so as to be able to free itself from some of the royalty payments it makes, also reducing the costs of its handsets. Nevertheless, this could be seen as a direct blow to Qualcomm.

At the moment, Qualcomm does not own too much intellectual property around WiMAX and LTE, even if it is a common fact that handsets will still need to communicate with 3G standards for a while. Samsung’s entering the market is also facilitated by the fact that other two large players have left the game. Texas Instruments, the second largest chip provider, announced in October that it planned to exit the wireless baseband business, yet it is still making 4G chips with Motorola. Freescale, another name in the industry, also announced plans to sell its handset business.

The competition in this market segment has become tighter and is expected to tighten even more, as Qualcomm is reported to be losing IP power. Samsung might have an advantage given its experience in the memory manufacturing segment. On the other hand, the company could face difficulties in gaining customers on the market, other than its own handset division.