Nokia Establishes Modem Connection With Renesas

Nokia is unloading its wireless modem business. The company said today that Renesas Electronics is acquiring the division, which makes inexpensive plug-in USB modems, for $200 million. As part of the deal, Renesas is getting Nokia’s LTE, HSPA and GSM technologies and patents, as well as 1,100 Nokia R&D staffers. It’s also entering into a long-term alliance with the company to develop future wireless broadband standards–high-speed packet access (HSPA+) and long-term evolution (LTE).

“The planned transfer of Nokia’s wireless modem business enables Renesas Electronics to maximize the value of Nokia’s technology assets and engineering expertise in delivering advanced mobile platform solutions to the market by combining them with Renesas Electronics’ market-proven multimedia processing and RF technologies,” Nokia said in a statement.

Unloading a wireless communications hardware business as Nokia (NOK) is doing here might seem an odd move for a wireless communications hardware maker, but in this case it’s quite wise. Wireless modems are a low-margin business. Nokia is far better off dumping it and focusing more of its energy on its smartphone and Internet services businesses, which have been lagging for far too long.