February 27, 2014 5:28 am JST

Fujitsu, Docomo, NEC abandon development of smartphone chips

TOKYO -- Fujitsu, NTT Docomo and NEC will dissolve by March a joint venture for developing core chips for smartphones, ending their bid to challenge the market dominance of overseas players.

     The venture, Access Network Technology, was formed in August 2012 to develop baseband chips, which manage wireless communications in smartphones. It is capitalized at 100 million yen ($969,180), with the Fujitsu group owning a 62.3% stake, Docomo 19.9% and NEC 17.8%.

     The partners had originally planned to work with Samsung Electronics to compete with U.S. rival Qualcomm, which boasts a roughly 40% market share. But the deal fell through, with the Japanese and South Korean contingents unable to agree on such issues as patents and technology sharing.

     With Samsung out of the picture, among other setbacks, Access Network Technology had trouble raising research and development funds. Qualcomm, which specialized in chips for mobile phones, spends the equivalent of 400 billion yen to 500 billion yen annually on R&D, while the Japanese venture likely had only 10 billion yen a year at its disposal.

     Meanwhile, Taiwanese chipmaker MediaTek supplies low-cost chips for the affordable smartphones sweeping across China, boosting its market share.

     Fujitsu smartphones used Access Network Technology's chips for a time, but the venture was unable to cultivate a customer base either at home or abroad. Its current global market share is believed to be close to zero.

     Its founding companies saw that prospects were poor for taking on the global market leaders and chose to liquidate the firm. The 90 or so employees at the venture are expected to return to their original employers.

(Nikkei)