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Ericsson moves towards mobile phone streaming video

In a shrewd move, Ericsson signs a deal with Intel and secures its 3G future

Mobile phones with MP3 audio and streaming video capability may seem a tad far off, but Swedish mobile manufacturer Ericsson is investing in the possibility right now. The company on Friday signed a deal with chip giant Intel for a three year supply of flash memory -- vital for such applications.

Manufacturers are promising mobile devices capable of downloading streaming music, Internet, and real time video conferencing as early as next year. However, as the move towards the so-called 3G networks opens up, observers agree there will be increased pressure on dwindling supplies of flash memory. The move by Ericsson could be a cunning plan.

"This deal is going to cover the flash memory we're going to need for the next three years," says an Ericsson spokesman.

So why the urgency over flash memory? According to Roy Taylor, managing director of Vanguard a major UK DRAM manufacturer, demand for memory has been steady but falling prices have seen margins contract leading to minimal investment in new fabrication plants. Taylor sees the continuing situation will lead to a "major memory shortage" in the next two years: about the time when mobile manufacturers will see flash requirements rocket.

"This [deal] is a great piece of news for Ericsson and a very sensible move," says Taylor, "If I were a competitor I'd definitely be trying to secure my flash supplies."

Jake Saunders, regional director at telecoms analysts Stragis Group, agrees the move was a shrewd one. There is a lot of strong competition in this space and "if it doesn't get the right products out at the right time it'll miss the boat."

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