Nokia said Tuesday it would sell its wireless modem business, which has been hurt by Chinese competition, to Renesas Electronics of Japan for $200 million, The new York Times’s Kevin J. O’Brien reports.
Prices for the devices have plunged over the last three years amid competition from Huawei and ZTE, both based in China.
Pal Zarandy, a senior partner at Rewheel, a mobile industry analysis firm in Helsinki, said the average price for wireless broadband modems has plummeted to about 30 euros, or $38, from 120 euros in 2007. most mobile operators in Europe give away wireless broadband modems, which are typically plug-in USB sticks, to attract new mobile broadband customers.
“The USB market has become a very low margin business,” mr. Zarandy told The Times. “Nokia has apparently decided it is better to concentrate on more profitable aspects of the business.”
As part of the transaction, Nokia said it would transfer 1,100 Nokia employees in Finland, Denmark, India and Britain to Renesas, a Tokyo-based maker of handset components. Nokia said it expected to complete the deal in the fourth quarter.
In a statement, Nokia described the sale as part of a long-term alliance to develop technologies for the two most popular wireless broadband standards: evolved high speed packet access (H.S.P.A.+) and long term evolution (L.T.E.).
“The planned transfer of Nokia’s wireless modem business enables Renesas Electronics to maximize the value of Nokia’s technology assets and engineering expertise in delivering advanced mobile platform solutions to the market by combining them with Renesas Electronics’ market-proven multimedia processing and RF technologies,” Nokia said.
Wireless broadband connections using L.T.E. and H.S.P.A.+ technology accounted for 17 percent of all broadband connections in Europe at the end of 2009, and 7.1 percent in the United States and Canada, according to Berg Insight, a mobile telecommunications research firm in Gothenburg, Sweden.
Last week, the European Commission said it had opened an investigation into a complaint by Option, a Belgian maker of wireless modems, which charges that unidentified Chinese competitors were dumping wireless modems at “unfair prices” in Europe.
The antitrust investigation is the biggest so far into China’s high-tech industry by the European Union. Chinese exports of machinery and electronics into Europe reached $146.6 billion in 2009, according to Chinese government figures.
According to Berg Insight, Huawei is the European market leader in wireless broadband modems, with an estimated 53 percent of the market, followed by ZTE, with 30 percent.
Other Chinese exporters of wireless modems to Europe include Asus and Foxconn.