February 9, 2007 – Infineon Technologies AG says that it has been selected by Nokia to supply baseband and RF chips for GSM mobile handsets. Infineon’s E-Gold voice single-chip system-on-chip, combining a baseband processor, radio frequency transceiver, power management unit and RAM, will go in “selected future entry-level phones.”

Marketwatch noted that such entry-level handsets, mainly designed to make phone calls plus some basic features such as color screen and text messaging, are in high demand in emerging markets such as India and China, where Nokia has a strong presence. Infineon already provides the proprietary processors upon which almost all of Nokia’s radios are currently designed, according to Marketwatch, adding that the German chipmaker probably offered sweetheart terms to win this business.

Richard Windsor, a UK-based analyst with Nomura, was quoted by Marketwatch saying that the deal probably won’t put too much pressure on competitor Texas Instruments because it will take time for Nokia to migrate its platforms, design, and logistics to accommodate a new chipset supplier.

The deal is seen as a particular boon to Infineon, which took a big hit when its biggest customer, Benq Mobile, went bankrupt last year, though the firm has brought in some new business from Samsung and LG Electronics. Marketwatch noted that UBS analysts speculate that the chipmaker could have “three or four” more design wins with Tier-1 handset makers up its sleeve, and could be poised to take 30% of the entry-level handset baseband market by next year.