Nokia Sells Modem Unit for $200M

Nokia Corp. (NYSE: NOK) said today that it will sell its wireless modem business to Japan's Renesas Technology Corp. for about $200 million in a bid to focus on its core mobile device and Internet services activities.

Wireless modems are the essential components that enable any mobile device to connect to a wireless network. Renesas will acquire Nokia's wireless modem technologies for GSM, high-speed packet access (HSPA), and Long Term Evolution (LTE), which Nokia notes have been used for "billions" of handsets worldwide. (See Challengers Shake Up LTE Chips .)

Renesas will also gain certain patents related to these technologies as well as about 1,100 Nokia research and development (R&D) employees, most of whom are located in Finland, India, Denmark, and the UK, as part of the deal.

In addition to the financial transaction, Nokia and Renesas also agreed to cooperate on the development of future radio technologies.

For Nokia, the asset sale is an extension of the chipset and component sourcing strategy that the Finnish company put in place back in August 2007. At that time, Nokia radically changed its chipset strategy by announcing it would use multiple vendors across all technology protocols and that it would start licensing its modem technology. The first licensee of Nokia's modem technology was STMicroelectronics NV (NYSE: STM). (See Nokia Reveals Chipset Shakeout, Nokia Revamps Chip Strategy, and Nokia, STMicro Team.)

Now, Nokia has decided to shed the modem business altogether so it can focus on its device and Internet services businesses. As Nokia's new head of mobile solutions, Anssi Vanjoki, recently admitted, the vendor has bigger challenges, like regaining a leadership position in the smartphone market, to overcome right now. (See No Androids From Nokia.)

"The alliance enables us to continue to focus on our own core businesses, connecting people to what matters to them with our mobile products and solutions," said Kai Oistamo, executive VP at Nokia, in a statement.

For Renesas, which has licensed Nokia's modems since 2009, the acquired technologies will complete its mobile device platform offering by adding to its application processors, radio frequency (RF) transceiver integrated circuits, high-power amplifiers, and power management devices.

The transaction is expected to occur in the fourth quarter of this year, subject to regulatory approvals.

— Michelle Donegan, European Editor, Light Reading Mobile