Nokia reportedly has begun design-in with Taiwan-based MediaTek and MStar Semiconductor for chipset solutions used in 2.5G and 2.75G handsets, with one or both of them expected to land orders for the vendor's new models scheduled for launch in the second half of 2012, according to industry sources.

In response, MediaTek and MStar both said they are constantly contacted by contract makers of the international vendor, without elaborating further.

Nokia is actively seeking chip partners who can help significantly lower its production costs, the sources pointed out. Both MediaTek and MStar, which specialize in the design and development of low-cost handset solutions, and have expertise in making end products differentiated from others, are pinpointed as Nokia's new potential partners.

MediaTek and MStar had been approached by Nokia since 2010, but failed to work out ways to cooperate due to the low ROI considered by both IC firms, the sources indicated. Nokia had previously requested the two chip firms to develop software and firmware solutions for its operating system, while requiring very low quotes from them.

The sources identify MediaTek as the most likely supplier for Nokia's upcoming models. MediaTek has thus far shipped more than one billion chip solutions for 2.5G and 2.75G devices, and can better utilize its existing well-built distribution channels in China and other emerging markets as well as sufficient R&D resources, the sources said.