InterDigital Inc (IDCC)

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Ericsson rumored withdrawal from Sony Ericsson may affect partnerships with Taiwan handset makers

Market reports are circulating again that Ericsson is planning to withdraw from its 50/50 joint venture Sony Ericsson with Sony – a move that may cause a drastic change in partnerships between the handset vendor and Taiwan ODM makers, according to sources with the Taiwan handset industry.

According to German media, Manager Magazine, Sony is in talks with Ericsson to buy the entire handset company and is negotiating with banks to get funding for the deal.

Ericsson's exit from the joint-venture is a likely outcome after Sony's veteran Hideki Komiyama took up the CEO post of Sony Ericsson in late 2007, commented the market sources.

The merger of Ericsson Mobile Platforms (EMP) and STMicroelectronics' ST-NXP Wireless into a 50/50 joint handset chip joint venture in February this year also indicates that Ericsson is departing from the end-user market, the sources added.

If Sony finally takes up the whole ownership in Sony Ericsson, Sony may follow the steps of Sharp and Fujitsu to focus mainly on the high-end segment, and the focus shift may affect significantly the vendor's ODM production partners in Taiwan, contended the sources.

Sony Ericsson's major handset partners in Taiwan include Arima Communications, Chi Mei Communications Systems (CMCS), and HTC (High Tech Computer). Foxconn International Holdings (FIH), the Hong Kong-based subsidiary of Foxconn Electronics (Hong Hai Precision Industry), is also a maker for Sony Ericsson.

ODM makers such as Arima and CMCS might be affected more serious than EMS firm FIH or smartphone maker HTC as Sony may utilize its in-house resources to develop high-end handsets and then outsource the production to EMS firms such as FIH or Flextronics International, the sources indicated.

http://www.digitimes.com/news/a20090320PD214.html