Freescale seeks new major mobile customer by end 2008

Freescale Semiconductor has set a goal to turn a big mobile phone maker on to its handset chips this year, to further grab market share and offset the impact of Motorola's woes.

The chipmaker currently sells most of its handset chips to two companies, Motorola and Research in Motion (RIM). But Motorola's falling market share is hurting Freescale, as is the handset maker's decision to use wireless chips from other suppliers.

"We have a big problem with our biggest customer. We have to make sure we help Motorola as much as we can to get over this hump," said Henri Richard, chief sales and marketing officer at Freescale, at a meeting with the press in Taipei.

The problem led to his setting a new goal for this year. "I plan to exit 2008 with one other major customer," said Richard. He specified the new customer would be in 3G handset chips.

One target for the company is Nokia, the world's largest handset maker. Ever since Texas Instruments lowered its sales and net profit forecast for the first quarter due to trouble in wireless chips, analysts have speculated the company may have lost market share at Nokia, or that Nokia may face faltering handset sales.

"That's a big one to win. It takes a lot of work," he said.

Mobile phone makers have been warming to Freescale ever since Motorola started sourcing handset chips from other chipmakers, he said. Handset makers used to worry that Motorola drove Freescale's chip development decisions, but now that Motorola has multiple chip suppliers, that fear is dissipating.

Motorola slipped to third place in global handset market share last year, behind Samsung and top-rated Nokia, according to market researcher IDC. Motorola shipped 159 million mobile phones last year, a decline of nearly 27 percent compared to a year earlier. Samsung's shipments increased almost 42 percent year-over-year to 161.1 million, while Nokia's grew 26 percent to 437.1 million.

Richard joined Freescale as chief sales and marketing officer late last year, after stepping down from the same position at microprocessor maker Advanced Micro Devices (AMD). He said he was not worried about a change in corporate culture because AMD CEO Hector Ruiz used to head Motorola's chip division, which was spun off as Freescale.

"I've noticed his influence here," Richard said.

Around 20 percent of Freescale's sales are to wireless communications, including handsets and base stations, while 40 percent go to the auto industry. The company hopes to focus more on consumer electronics after its $110 million purchase of chip designer Sigmatel earlier this year. Sigmatel specialized in chips for digital music players, digital TVs, and printers.