The unfavorable Japanese chip supplier Renesas Electronics Corp. officially issued a statement recently to terminate its wireless modem business, which seems to be an inevitable end for the industry. Renesas acquired a wireless modem development team from Nokia in 2010, so this time all members of the team will be affected, including 1,100 employees in Finland, 300 employees in India and 30 employees in China.
When announcing the acquisition of Nokia's modem business, many people in the industry expressed doubts, but it also showed Renesas' ambition to turn from a chip supplier to become a leading global supplier of mobile technology. However, this impossible dream finally died after three years of hard work. So, what exactly caused this ending?
First of all, since 2010, orders in the global mobile market have changed a lot, and a few smart phone winners (such as Apple and Samsung) and mobile chip suppliers (such as Qualcomm and Samsung) have been made.
If your product has not been used on an iPhone or Galaxy phone by now, you will find that your mobile chip-especially a chip designed for advanced smartphones-is almost useless.
Obviously, creating a company based on advanced cellular technology with a well-known pedigree (such as from Ericsson or Nokia) is not enough to win global competition. Neither Renesas Mobile (RMC) or the ST-Ericsson joint venture (which had gone bankrupt earlier this year) failed to survive the huge changes in the market over the past two years.
Secondly, neither ST-Ericsson nor Renesas Mobile has formulated a reliable China strategy.
These two companies have fallen far behind their Asian competitors, including MediaTek in Taiwan, Spreadtrum in China, and the growing number of Chinese fabless chip suppliers. The focus of these companies is now. The booming Asian low-cost smartphone market. Whether it is Renesas Mobile or ST-Ericsson, there is no suitable product portfolio or development strategy that can well meet the requirements of Chinese OEMs and ODM manufacturers.
Third, we should not underestimate the manpower and material resources required to develop a cellular modem.
The development of Modem chips requires engineers to have extensive knowledge and experience, and be able to keep up with the ever-changing cellular standards. More importantly, unlike the digital application processor, it seems that the work on these cellular modem chips will never be completed. Even after the modem design is completed for a long time, it still has to pass a long certification process. Modem chips need to undergo field testing, modification and approval by the cellular operator, and then have to be further adjusted. It is not uncommon for modem chip development companies to employ more than a thousand engineers.
Fourth, this expansive human and material resources can easily exhaust the company's resources. If a large order is not won, the company is likely to be unsustainable.
ST-Ericsson and Renesas Mobile have been seeking buyers for the past few months, but ultimately did not find a suitable one. In fact, they are very similar to the experience of TI, Freescale and ADI a few years ago, these companies eventually gave up the modem business completely. ADI is an exception, only because the company's modem department was acquired by MediaTek.
Fifth, both Renesas and ST-Ericsson suffered a combined nightmare.
As strategy analyst Sravan Kundojjala commented in March of this year, ST-Ericsson has been struggling with "repeating traditional products, transitioning to new product roadmaps, and constantly changing management styles." "The analyst pointed out at the time that ST-Ericsson worked hard to integrate multiple companies and execute the original plan. Similarly, Renesas is already a complex (and inflated) entity after the merger with the NEC chip business unit, and it cannot Do not add more than 1,100 Finnish engineers to its wholly-owned mobile chip subsidiary Renesas Mobile.
In the process of globalization, Renesas transferred the key decision-making power of Renesas Mobile-chip pricing, product development roadmap and LTE modem to Renesas Mobile Paris. Although it evades the timidity of the Japanese, even if it is bold enough, it is really difficult to manage a global team.
The parent company Renesas announced that Renesas Mobile will "stop development activities and sales promotion of LTE modem." But it is not clear where all the IP developed by Renesas Mobile-including LTE modem-will go and whether it will be licensed to other companies.
We also do not know whether Renesas Mobile, a wholly-owned subsidiary of Renesas, will shut down, and the fate of Renesas Mobile Europe, Renesas Mobile India and Renesas Communications Technology (Beijing) Co., Ltd.
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