David Carey's teardown reports on portable electronic products from original equipment manufacturers (OEMs) in mainland China increasingly point to a new design reality—that strategic partnerships of Chinese OEMs with silicon suppliers are beginning to pay off. A recent report on the e757 smart phone from Guangdong-based TCL Corp. shows the technological sophistication of mainland cellphone manufacturers.

As the building blocks of the e757 data-centric handset show, chipmakers like Freescale Semiconductor, Philips Semiconductors and Wavecom are playing a significant role in system designs as more functionality gets built into the chips.

Asian manufacturers have been gradually expanding their in-house design expertise while relying on reference design solutions from big chipmakers. In some cases, there are specialized design houses that bridge the gap between OEMs and chipmakers.

These independent design houses are helping OEMs design increasingly complex chips onto boards. A large OEM such as Haier Group would assign a product—for instance, a cellular handset—to an independent design house like Cellon International. The OEM then specifies design requirements and lets the design house do the rest.

Since the late 1990s, when OEMs in mainland China started venturing into the cellular business, they either relied on Taiwan-based design houses or forged key alliances with chipmakers such as Texas Instruments Inc. and Qualcomm Corp.

These strategic alliances with silicon vendors were further boosted when Chinese cellphone makers confronted the design challenges associated with the production of 2.5G-based phones. In September 2000, TI signed co-development pacts with four Chinese handset makers, including ZTE Corp. and Ningbo Bird Co. Ltd. The pact stated that TI would provide semiconductor components, such as DSPs and analog chips, development tools and technical consultation to help these OEMs build GSM- and GPRS-based handsets.

The fact that 2G and 2.5G handsets produced by Chinese firms are now technically comparable to those of incumbents like Nokia and Motorola is a testament to the success of alliances with semiconductor firms.

Having established robust sales and distribution channels, Chinese OEMs seem inclined to move toward stronger R&D capabilities. And here, chipmakers have been helping OEM clients sharpen their design skills.

A couple of years ago, Analog Devices Inc. helped software and system integration engineers at TCL develop several phones that were based on a single chip, but used different software packages. So, given the market demand for a certain display screen function, user interface or ring-tone flavor, handset designers could take a basic software protocol stack and spin the end application the way they want.

OEM firms and system houses in mainland China could be pleased with the overall progress they have made so far. But as they enter the uncharted waters of 3G and high-definition TV technologies and strive for greater design sophistication, their partnerships with silicon suppliers may become even more critical.

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