Date: 26/10/2010

Selected U.S. semiconductor companies receive a bounty of orders from ZTE

The Chinese Telecom joint ZTE has placed orders worth billions of dollars for buying semiconductor chips from leading chip vendors in U.S.

ZTE announced it has signed purchase agreements with five 5 U.S. semiconductor vendors for buying devices valued at 3 billion US$. The five chip makers named are QUALCOMM, Texas Instruments, Freescale Semiconductor, ALTERA and Broadcom Corporation over the next 3 years.

QUALCOMM and Broadcom supplies semiconductor chips for telecom terminal equipments and telecom base stations and also SoCs for tablets. Texas Instruments is in mutiple domains such as analog, mixed signal and as well as SoCs for broad range of telecom domain including mobiles. Freescale's DSPs and SoCs are more used in telecom equipments and handheld devices, where as Altera is a FPGA vendor, whose advanced high-end FPGAs are widely used in telecom domain.

For any communication/electronic equipment manufacturer, partnership with semiconductor companies determines its product differentiating abilities, much of the product special features are embedded inside the complex SoC chips. Significant amount of design is done in joint partnership.

India is a big market for companies like ZTE and Huawei. Unfortunately since there is no any competing telecom equipment maker (of ZTE scale) found in India, big chunk of these chips enter Indian telecom equipment market via Chinese telecom companies. For not establishing electronics manufacturing eco in India, India's trade imbalance after the fossil-fuel trade is going to be electronic hardware trade. Even on design services, Indian engineers only provide the design services; Indian design service providers don't own the IP. The IP based sales is hardly 20% of total Indian design services revenue.