Motorola, the world’s second largest mobile phone maker, is looking to buy a smaller rival to strengthen its market position. The US company hopes that the smaller partner will also provide new design engineers, improved efficiency and economies of scales.
Consolidation is inevitable as weak demand forces mobile phone manufacturers to cut research and development costs. Many smaller handset manufacturers will be forced to either exit the market or link with rivals to survive.
Motorola is hoping to expand its market share from 17% to 25% in two to three years. It could be looking to provide 6% of this growth through acquisition.
However, Motorola has stated that it is not interested in a merger of equals or in being acquired. Mobile phones are one of its key businesses and the company has no intention of changing its brand name.