Fujitsu, NEC, NTT Docomo Create Smartphone Chip Company

The joint venture, Access Network Technology, will aim to build chips that will help Japanese device makers rely less on foreign vendors, the companies say.

Fujitsu, NEC and NTT Docomo jointly are creating a company that will make and sell wireless chips for smartphones in an attempt to reduce the reliance of Japanese mobile device makers on foreign chip vendors.

The new venture, Access Network Technology, will enable the companies to develop chips on their own without having to rely on the schedules and availability of chip makers from outside Japan, giving the vendors greater control over the manufacturing of and access to the processors. Access Network Technology reportedly initially will supply wireless chips to Fujitsu, NEC and Docomo, but eventually will sell products to other companies.

The startup company, created with $1.28 million from the three vendors, will begin operations this month. Access Network Technology will find itself going up against the likes of Qualcomm and Samsung Electronics, among the larger chip makers for mobile devices, including smartphones and tablets. However, even Qualcomm has had supply issues in recent months, with officials complaining about some limited availability of 28-nanometer chips.

"We are continuing to see strong demand for our new Snapdragon S4, and other 28nm chipsets, and that demand continues to exceed our available supply, Qualcomm CEO Paul Jacobs told analysts and journalists last month on a conference call.

In announcing the new company Aug. 1, officials with Fujitsu, NEC and Docomo talked about the explosive expansion of the smartphone market, as well as the growth in data traffic that is making communications platforms increasingly important. The three companies have worked in the past on technologies. Last year, they€”along with Panasonic and Samsung Electronics€”announced a partnership to manufacture and sell their own mobile phone chips. However, that partnership dissolved earlier this year.

Now Fujitsu, NEC and Docomo officials are saying that technology from the three companies and their past history of working together will create products that will compete in the global market. Fujitsu officials said they expect Access Network Technology to hold 7 percent of the global market for smartphone chips by the end of 2014.

Fujitsu and its subsidiary, Fujitsu Semiconductor, combined will own 62.3 percent of the new company, while Docomo will own 19.9 percent and NEC 17.8 percent.

The new company will not only create chips for mobile phones, but also will develop products for 4G Long-Term Evolution (LTE) networks and future generations of networks, according to the parent firms.

Access Network Technology, which will have about 85 companies, will be competing in a booming smartphone marketplace. According to analysts with Juniper Research, about 132.9 million smartphones shipped in the second quarter this year, a jump from the 105.2 million that shipped during the same period in 2011.

Currently, chips designed by ARM Holdings and developed by the likes of Qualcomm, Samsung, Texas Instruments and Nvidia are found in more than 90 percent of smartphones. However, other chip makers, including Intel, are looking to make inroads into the space. Intel is pushing its Atom Z2460 Medfield platform for smartphones, and Lenovo, Orange and Lava International of India this year have launched devices based on the Intel technology.