HTC may be developing own chips... Dumps Qualcomm?

In an attempt to reduce its reliance on third-party processor makers, HTC has reportedly signed a memorandum of cooperation with ST-Ericsson to develop its own mobile chips, following the same route as its rivals Apple and Samsung.

According to a report by the China Times, HTC will develop a dedicated application processor that will be incorporated into its low-end smartphones when production starts next year.

Facing increased competition in the smartphone market as of late, HTC has been forced to overhaul its device strategies, focusing on ‘hero’ devices that started with the launch of the HTC One range of Android smartphones that fused impressive hardware specifications with a tighter software experience that built upon Google’s Android operating system.

The move into processor development mimics that of Apple and Samsung, with their A4/A5/A5X and Exynos mobile chips powering their latest smartphones and tablets. Samsung has been rumoured to have dropped its reliance on Qualcomm, pushing forward with its new range of quad-core processors and HTC looks set to do the same when it starts production with ST-Ericsson next year.

A possible reason for HTC’s decision to reduce its reliance on Qualcomm (but also Nvidia) may be as a result of issues faced with the launch of its One X smartphone, which utilises Nvidia’s quad-core Tegra 3 in European markets but features Qualcomm Snapdragon S4 processors for its 4G-enabled devices in North America and other regions. It has also been suggested that by developing their own chipset, HTC could ease up on their dependance on chipset manufacturers and could start putting out lower-priced devices in the future.

Finnish mobile phone maker Nokia has already penned a deal with ST-Ericsson, announcing a deal in November 2011 to supply the chipsets for handsets it intends to deliver to the low, mid and high-end smartphone markets around the world. HTC has not confirmed the memorandum at the time of writing, but we have reached out for comment and will update the article should we receive a reply.

It’s not the first time we’ve seen HTC dabble in its own chips. The company debuted the HTC Image Chip in the new One Series of smartphones, an uninspiring name for a processor that significantly boosts the photography skills of devices like the One X and One S. However, an application processor like HTC will apparently be producing with ST-Ericsson is another level of complexity up from a companion chip.

The first chips are expected to show up in production quantities in 2013, and though neither HTC nor ST-Ericsson have said, but its possible both Android and Windows Phone devices will be aiming to use them. Currently, Nokia has the entry-level Windows Phone market mostly to itself, though ZTE is showing increasing interest in that segment, and HTC could well look to rebuild its fortunes with a play of its own.