Jha's move to Motorola and phone chipset suppliers

The recent surprising news of Qualcomm's COO Sanjay Jha, to lead the handset division of Motorola will have a significant bearing on the handset semiconductor players.



Jha had been with Qualcomm since early days, he joined the company as a senior design engineer and then rapidly rose through the ranks to lead QCT (the ASIC wing of Qualcomm) as VP of Engineering by late 90' s. In the presence of CEO Irwin Jacob at the helm of Qualcomm (son of the founder Irwin Jacob) , further growth was impossible at Qualcomm. Thus joining Motorola as co-CEO, and the promise to lead the Mobile Device unit's spin off is a smart natural choice.



Motorola handset business had got out of making ASIC's under Mike Zaviroski. The ASIC design was transferred to the semiconductor division in 2002. Since then there had been a drive to adopt the PC makers model, which is, buying off the shelf IC's with more of an emphasis on branding and supply chain management. What prevented the rapid adoption of this model?; the legacy software which was tied closely to the legacy chips. PC manufacturers, luckily did not have to deal with the software issue, they had Microsoft.



In a way, this dependency benefited the incumbent chip suppliers. The only way to dislodge the incumbent was to provide Platform solutions, comprising both hardware and software at a price point compelling enough to justify the switch. This dependency had benefited Freescale (in Motorola), TI (in Nokia), and EMP (in Sony Ericsson) and ensured that the revenue kept on coming as long as the dependency sustains.



Then, with the falling ASP of phones and the competitive products from the competition like Qualcomm and Broadcom, sooner or later a dent was bound to occur in this relationship. Motorola in the recent past announced relation with Texas Instruments, essentially cutting out Freescale from the future mix of mid and high tier phones for WCDMA market. Already, Infineon had been supplying chips for ultra low tier phones and Qualcomm was the supplier for CDMA products.



Qualcomm had been trying very hard for past several years to win the WCDMA sockets in Motorola. A few announcements were made last year, but nothing concrete occurred. Eventually, TI won the high tier sockets edging out Freescale from that business. TI already had a strong presence with their OMAP processors, which facilitated the win. With Jha coming on board, the dynamics of chip suppliers are bound to change. Jha who had been instrumental in pushing Qualcomm inside Motorola, is now inside Motorola. This can have far-reaching consequences for both TI and Freescale. Qualcomm has a very broad portfolio. It is entirely possible, that Freescale will even lose the low to mid tier segment of chips to Qualcomm. Wireless division of Freescale had been for sale, Broadcom backed out of the purchase late last year. With a losing customer base, the sale or merger of Freescale wireless assets will become all the more difficult.



Furthermore, TI will have to marshal all its resources to sustain the newly won sockets inside Motorola. Time will tell, whether it will able withstand the Qualcomm's onslaught but more and more it looks unlikely that TI will remain inside Motorola for long. Indeed, the move of Jha to Motorola, is a triumph for both Qualcomm and Jha.