Texas Instruments predicts $20-$25 handset for 2006

"We're ramping very soon, targeting the $25 and low $20 price range (for handsets that contain the chip)," TI's chief of wireless chips, Gilles Delfassy, told Reuters on Tuesday at the 3GSM World Conference, the wireless trade show under way this week in Barcelona, Spain.

"We will ship millions in '06, hopefully tens of millions," Delfassy said in an interview.

The cheapest phones at the moment, contain a set of two chips from TI and cost just under $30. Integrating all the functionality in a single chip cuts the price.

Texas Instruments, the world's third-biggest chip maker and the global leader in chips for cell phones, will still be able to make a profit despite the low price of the chip, which contains all the key elements to power a GSM handset, Delfassy said.

Ultra-cheap phones became an important driver of the mobile phone business last year, opening the market for low-income subscribers in emerging economies such as India and Africa.

Motorola, a Texas Instruments customer, has won two projects to supply operators in emerging markets with at least 12 million of these ultra-cheap phones. It said on Monday it expects to have sold 20 million of them by year-end.

More-advanced networks
This year, Texas Instruments will take the single-chip formula to phones for more advanced 3G networks. Delfassy said he expects a single-chip WCDMA sampling for his customers in the second half, with commercial deliveries probably in 2007.

That chip will allow for a WCDMA phone in the $100 to $120 price range, a threshold that will broaden the market. Rival Qualcomm said earlier on Tuesday it expects it can power $100 to $120 WCDMA phones by the end of the year -- it does not compete in the ultra-cheap GSM market.

Texas Instruments has also launched a new multimedia processor for cell phones, called OMAP3 and used in advanced handsets, which it claims will be the most powerful in the market.

"It's the industry's highest-performing processor," Delfassy said.

Using multiple cores, just like some of the most advanced microprocessors in personal computers, it can handle multiple tasks at the same time.

The performance of the chip is comparable with the fastest Pentium 2 processor, and the 3D graphics accelerator is comparable with a PlayStation 1 games console from Sony, Delfassy said.

It will also allow mobile phone makers to include a 12-megapixel digital camera should they wish.