Amazon Joins Hands with Foxconn to Develop Smartphones

Taipei, Nov. 21, 2011 (CENS)--After carving out a huge success with its Kindle Fire in the tablet PC segment, Amazon has allegedly worked with the Taiwan-headquartered Foxconn International Holdings Ltd. on joint development of smartphones, showing its ambition to further extend its reach to the fast-growing market, according to market observers in Citigroup Securities.

The observers noted that the two parties have started their cooperation on a JDM (joint design manufacturing) basis, and their first smartphone will land in the market in the fourth quarter of 2012 at the earliest, given the fact that the joint development goes smoothly.

Amazon’s smartphone is likely to be built with Texas Instruments (TI)’s OMAP 4 processors, and Qualcomm’s 6 series dual-mode baseband chipsets, stated the observers. They continued that the smartphone will be targeted at the middle-end segment initially, considering that TI’s OMAP 5 processors (featuring ARM Cortex A15 and 2GHz dual core) will be launched in the third quarter of 2012 and the OMAP 4 series models will be supplied mainly for use in middle-end handsets.

The observers estimated the BOM (bill of material) cost of the smartphone at less than US$100 per unit, as the unit price of an OMAP 4430 processor may slide to US$10 in the fourth quarter of 2012, when costs of a combination of a 4-inch touch panel and a display, a Qualcomm dual-mode baseband chipset (HSPA+/CDMA EVDO) and an 8-megapixel camera lens will also drop to about US$20-22, US$10-12 and US$9-10, respectively. Plus, the observers furthered, a 512MB mobile DDR memory module plus 8GB NAND flash memory will cost less than US$15 then.

In consideration of assembly, royalty payments and related necessary costs, the observers estimated that an Amazon’s smartphone will cost between US$150 and US$170 per unit. However, they added that Amazon may retail the phone at a price that is the same with or only a littler higher than the estimated costs in the future, as the company, after succeeding with its budget-priced Kindle Fire, may try to continue making profits from provisions of application software, instead of hardware manufacturing, in promotion of its smartphone.