Report: Lenovo to Design Own Smartphone, Tablet Chips

Lenovo is heading into the smartphone and tablet chip design business, according to a new report in EE Times. The Chinese PC maker, which for the last few quarters has been jockeying back and forth with Hewlett-Packard (NYSE: HPQ) for worldwide desktop PC and notebook shipment leadership, is the second largest smartphone maker in China behind Samsung but lacks a global presence for the devices. Will designing its own smartphone chips make Lenovo a stronger global smartphone player? Read on for the details…

Despite its lofty presence in the PC market, Lenovo is among a handful of manufacturers under increasing pressure to develop alternate markets to generate revenue as PC sales continue to slide in favor of tablets and smartphones. So it makes sense for the company to ratchet up its mobile device strategy. 

According to the sources cited in the EE Times report, Lenovo will expand its existing integrated circuits design group 10-fold to some 100 engineers by mid-year, heavily recruiting chip designers to drive the strategy. About 60 percent of the new engineers will be based in Beijing with the remainder located in Shenzhen, the report said. 

The company also has taken measures to cement its consumer electronic management ranks, tapping Yahoo (NASDAQ:YHOO) co-founder and former chief executive Jerry Yang as a consultant to its board and adding ARM founder Tudor Brown as a non-executive director. 

While having a larger IC design team may or may not help Lenovo make headway in the mobile device market, the company’s thinking is that at the least it will pack a bit more clout in negotiations with smartphone processor suppliers. Lenovo currently uses processors from Intel (NASDAQ: INTC), Qualcomm (NASDAQ: QCOM), MediaTek and Samsung in its smartphones. Samsung, according to the EE Times account, recently denied Lenovo access to its latest Exynos processor. 

Lenovo has repeatedly signaled its intention to expand its smartphone reach, from plans to launch a new device in Europe later this year to confirmed rumors that it was at one point considering making a bid to buy RIM, now known as BlackBerry (NASDAQ: BBRY). The company previously has indicated its overall willingness to expand beyond its core PC business, last September picking up little-known Stoneware, a small cloud computing and classroom management software developer whose technology will bring Lenovo into the BYOD era, and later in the month landing CCE, a Brazilian maker of PCs, tablets, smartphones and TVs, for $147 million.