NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, September 23, 2005

The market at the bottom of the pyramid has begun to attract the attention of a variety of industries; one of the most recent being the semiconductor industry.
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A German company, Infineon Technologies, has developed a platform design for an ultra low-cost (ULC) mobile phone that the company believes could bring down the production cost of a functional mobile phone to below $20 from the current level of $35.
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At a press conference held today by Infineon, S Surya, managing director of Infineon Technologies India, drew a comparison between the automobile and semiconductor industries when it came to new product development.
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Surya said that Infineon operated on the basis of a ?platform.? As in the case of the automobile industry, different products were rolled out of the same platform, a feature, which made the development of lower cost products a reality.
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The economic rationale for Infineon?s new platform design was provided by the significant growth expected at the entry level mobile phones. Strategy Analytics, a consultancy, has forecast that ULC phones would exceed 150 million in five years from the relatively insignificant level at present.
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Surya said that the industry?s cut-off for an ULC mobile phone was one that cost less than $ 50 (about Rs 2,200). With about two million new mobile connections added every month, India is one of the key markets for Infineon?s platform design for the ULC phones.
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Surya said that the company is currently in talks with mobile phone manufacturers to contract out its chips for the new phones. Once the talks are successfully completed, the stage would be set for mass production.
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Infineon?s new platform design needs below 100 components, as compared to the approximately 200 components needed by the models produced today, said a company release.