Nokia continues to reshape itself in the face of declining margins and market share, announcing the sale of its wireless modem business to Japanese chip firm Renesas.

 

Renesas will pay $200 million for Nokia’s LTE, GSM and HSPA modem patents and other assets of the business, the handset firm announced Tuesday. 

 

It said the two firms would form an alliance to develop HSPA+/LTE modems and “a long-term research partnership” on future radio technologies.

 

Nokia executive vice president Kai Oistamo said the alliance would allow the device-maker to focus on its core mobile products and enable Renesas to offer a full mobile platform solution.

 

Informa Telecom principal analyst Malik Kamal-Saadi said the deal meant Nokia must now find a reliable semiconductor supplier, “which can offer better integration between its software and chipsets.”

 

Nokia continues to rely on several suppliers – TI, Broadcom, ST-Ericsson, Infineon and now Renesas, he said.

 

“Although Nokia's size enables it to take advantage of competition surrounding the chipset market, the company needs to be careful and should consolidate its suppliers for smartphones, to two or three,” Kamal-Saadi said.

 

About 1,100 Nokia R&D staff based in Finland, India, the UK and Denmark will move to Renesas as a result of the sale.

 

“Our collaboration with Nokia will enable consumers to enjoy true mobile cloud computing experiences through our advanced high-speed mobile devices,” said Renesas president Yasushi Akao .

 

Renesas has licensed Nokia modems since 2009 and the two companies have been working together on building HSPA+/LTE platform.

 

Renesas Electronics was formed as a JV between NEC Electronic and Renesas Technology in April 2010.

 

The deal is expected to close in the fourth quarter of 2010.