Siemens and Intel in £1.3bn memory deal

Companies invest in future wireless Internet devices

Intel announced Thursday it will provide the high-performance flash memory for next generation Internet mobile phones and wireless devices from German electronics manufacturer Siemens in a deal worth $2bn (£1.38bn).

Over the next three years Siemens has committed to buying $2bn of Intel's wireless flash memory technologies, including its advanced StrataFlash. The companies have also agreed to develop wireless devices using Intel components.

Third generation (3G) Internet-enabled mobile devices, running at speeds many times faster than current GSM phones, are expected to debut in Europe in the next two to three years. It is hoped that these will prove a money-spinner for mobile phone manufacturers.

Internet companies plan to offer location-based services and advertising through these devices and telecom firms have invested heavily in the underlying networks. Flash memory provides storage for software and data in mobile phones, and will be particularly important with next-generation devices that handle moving images, high quality sounds and fast Internet links. Shortages of flash memory have held back manufacturers in the past, and securing lines of supply now is seen as an essential part of long-term planning.

"By entering into the supply contract with Intel, we have ensured our ability to respond in the best possible manner to the market demand for Internet-capable, mobile devices over the next few years," said Rudi Lamprecht, a member of Siemens' board in a statement.

There are, however, increasing doubts over the potential to make money from this future mobile Internet industry, given the amounts invested in network licences.

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