May 27, 2008 / 2:04 AM / 10 years ago

Samsung starts buying Infineon mobile chipsets

SEOUL (Reuters) - Samsung Electronics Co Ltd (005930.KS) said on Tuesday it has started buying chipsets, a key part of handsets, from German chipmaker Infineon (IFXGn.DE) in a move to reduce its reliance on Qualcomm Inc (QCOM.O).

Samsung, the world’s No. 2 mobile handset maker, had depended wholly on wireless technology firm Qualcomm, which holds patents for code division multiple access (CDMA) technology, for chipsets used in advanced third-generation (3G) mobile phones.

“In order to raise cost competitiveness, we have been supplied by Infineon,” Samsung spokesman Kwak Bum-joon said by telephone. “We have been diversifying parts supply sources.”

Kwak made the comment after the Chosun Ilbo daily reported that Samsung had developed a mobile phone model equipped with Infineon’s chipsets in April and exported the model to Europe since early this month.

The newspaper said Samsung’s move would help give it leverage in price negotiations with Qualcomm and likely have a substantial impact on other domestic mobile phone makers.

“Infineon’s chipsets are more than 20 percent cheaper than Qualcomm’s, but their quality does not lag behind Qualcomm’s at all,” a senior Samsung Electronics official was quoted by the newspaper as saying.

“We will be able to not only secure mobile phone chipsets for lower prices, but can strengthen price negotiations.”

Shares at Samsung Electronics rose 2.5 percent to 696,000 won by 8:42 p.m. EDT, outperforming the wider market's .KS11 0.8 percent gain.

Reporting by Park Ju-min; Editing by Kim Yeon-hee and Keiron Henderson

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