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Mobile Devices

LG-Nortel 8540 IP Phone Teardown

03 December 2008
The following is an overview of a teardown analysis conducted by IHS Technology Teardown Services.

Overview / Main Features

The LG-Nortel 8540 IP Phone is the result of the 2-year old partnership between LG and Microsoft to built office communication products based on Microsoft's Unified Communications software platform. What sets the LG-Nortel 8540 IP phone apart from other, more traditional, IP phones is the suite of Microsoft software platforms powering both the device and network communication. Most notable, the 8540 features a Windows CE 5.0 powered user interface (via the color 5.7 touchscreen display and capacitive touch scroll wheel) with seamless integration to Microsoft Office Communicator 2007 platform. In fact, the LG-Nortel 8540 is the first desktop IP phone we've encountered to use an ARM-based applications processor [to support the more sophisticated functionalities of Windows CE] and an integrated fingerprint scanner.

Overall, the LG-Nortel 8540 is a unique IP desktop phone offering from the Korean/Canadian firm, in that it supports Microsoft's Office Communicator platform (as opposed to more mainstream IP phones based on common SIP standard). To make up for the highly proprietary nature of the device and network platform, the 8540 offers premium features and end user functionality typically reserved for IP phones costing hundreds more. Like other IP-based desk phones, the LG-Nortel 8540 offers the standard 2-port 10/100 Ethernet with IEEE 802.3af Power over Ethernet (PoE) support. Also, the 8540 has two USB 2.0 ports to support peripheral support such as Bluetooth connectivity [for wireless headsets].

LG-Nortel 8540 IP Phone Main ImageLG-Nortel 8540 IP Phone Main Image

Target Market

Enterprise, government agency, and institutional workspaces upgrading to or leveraging existing IP based telephony infrastructure.


Per our understanding, announced in May of 2007 and released in September 2007.

LG-Nortel 8540 IP Phone - Main PCB TopLG-Nortel 8540 IP Phone - Main PCB Top

Pricing and Availability

Pricing - Keeping in mind that this IP phone is unlikely to be purchased alone in a retail environment, but rather is sold more at an enterprise level as part of a larger package, it is difficult to say what a typical LG-Nortel sales price may be in such a package for this unit. However, this unit was offered from several e-tailers at the time of writing (September 2008) for about $560 USD.

Availability - Global availability (assumed)

Volume Estimations

For the purposes of this teardown analysis, we have assumed a lifetime production volume of 20,000 units over 3 years.

As a reminder, teardown volume production assumptions are primarily used for our cost analysis in terms of amortized NRE and tooling costs, especially for custom components specific to the model being analyzed (mechanical components especially). Unless assumed, volumes increment by an order of magnitude. Minor changes in volume (say 1 million vs. 2) rarely have a large net effect on our final analysis.

LG-Nortel 8540 IP Phone - Main PCB BottomLG-Nortel 8540 IP Phone - Main PCB Bottom

Market / Sector Performance

IP Telephony is not an ongoing practice area for iSuppli, however per our own topical research in the area of VoIP (""VoIP Market: Maturity Approaches but New Opportunities Arise" - Q3 2007), we expect the VoIP market to be dominated by the enterprise segment (which accounted for 45% of the VoIP equipment revenue in 2007 and is expected to grow to 50% of the market for VoIP equipment.

Furthermore, as the installed base of PBX lines approaches 50% IP in 2009, iSuppli expects the rate of growth of IP lines to slow from its estimated 2007 rate of 17% to less than 10% growth by 2010.

iSuppli further estimates, that in 2007, Nortel leads the market share of the OEM Enterprise VoIP factory with 24% of the revenue with Avaya at 22% and Cisco at 17%. Both Avaya and Nortel are the market leaders in the hybrid ""flavor" of IP PBXs which makes up nearly 2/3 of the entire market while Cisco is the dominant player in the ""all IP" variant of the IP PBX market.

LG-Nortel 8540 IP Phone Cost AnalysisLG-Nortel 8540 IP Phone Cost Analysis

Cost Notes

Major Cost Drivers (Representing 72% of Total Direct Materials Costs) - Top 20 Items

Receiver Enclosure, Top - Injection Molded ABS-Polycarbonate

Chi Lin Technology - LQ057AC213 - Display Module Value Line Item - 5.7' Diagonal, 320 x 240 Pixels, 18bits per pixel, w/ Touch Screen

Button Insert - Injection Molded Plastic, Painted, Silkscreened (Qty:15)

Touchscreen Overlay - 4-Wire Resistive

Freescale - MCIMX31LVKN5B - Application Processor - ARM11 Core, Up to 532MHz, 90nm

UniMicron Technology - 8-Layer - FR4

Samsung Semiconductor - K4X51163PC-FGC3 - SDRAM - Mobile DDR, 512Mb (32M x 16), 133MHz, 1.8V (Qty:2)

Enclosure, Main, Front - Injection Molded ABS, Silver Painted, Silkscreened, w/ 8 Brass Threaded Inserts

Fingerprint Sensor - Assembly

Enclosure, Main, Rear - Injection Molded ABS

Rear Foot Stand, Top - Injection Molded ABS, Silver Painted

Micrel - KSZ8842-16MQL - Ethernet Controller -Dual 10/100 MAC & PHY, 2-Port Switch, Non-PCI Interface

Rubber Foot - Injection Molded Silicone Rubber, w/ PSA (Qty:4)

Monolithic Power Systems - MP1412D - DC-DC Converter (Qty:3)

Ceramic Multilayer - X5R/X7R (Qty:306)

Fortemedia - FM1093-G - Voice Processor - DSP Based, 3 Channels of A/Ds, 2 Channels of D/As

Texas Instruments - SN74AVCB164245GR - Bus Transceiver - Dual Octal, 16 Bit, w/ Configurable Voltage Translation and 3-State Outputs (Qty:4)

Samsung Semiconductor - K9F1G08U0B-PCB00 - Flash - NAND, SLC, 1Gb (128M x 8), 3.3V

Button Insert - Injection Molded Plastic, Silkscreened (Qty:2)

Foot Stand Rotating Actuator - Injection Molded Plastic (Qty:2)

Materials and Manufacturing $145.31
LG-Nortel 8540 IP Phone - Enclosure DisassemblyLG-Nortel 8540 IP Phone - Enclosure Disassembly

What Is Not Included in our Cost Analysis

The total materials and manufacturing costs reported in this analysis reflect ONLY the direct materials cost (from component vendors and assorted EMS providers), AND manufacturing with basic test. Not included in this analysis are costs above and beyond the material manufacture of the core device itself - cost of intellectual property, royalties and licensing fees (those not already included into the per component price), software, software loading and test, shipping, logistics marketing and other channel costs including not only EMS provider and the OEM's margin, but that of other resellers. Our cost analysis is meant to focus on those costs incurred in the manufacture of the core device and exceptionally in some circumstances the packaging and literature as well.

Manufacturing Notes

Country of Origin / Volume Assumptions

Based on markings, the unit was assembled in China. Furthermore, we have assumed that custom mechanicals (plastics, metals, etc.) were also sourced in China.

Country of origin assumptions relate directly to the associated cost of manufacturing, where calculated by iSuppli. In the cases of 'finished' sub-assemblies (such as the display module), we do not calculate internal manufacturing costs, but rather assess the market price of the finished product in which case country of origin assumptions may or may not have a direct effect on pricing.

Remember also that labor rates are applied directly only to hand inserted components and systems in our bill of materials, and although regional assumptions do, these new rates do not have a direct effect on our modeled calculations of placement costs for automated SMD assembly lines. ""Auto" inserted components (such as SMT components) placement costs are calculated by an iSuppli algorithm which allocates a cost per component based on the size and pin-count of the device. This calculation is affected by country or region of origin as well.

Design for Manufacturing / Device Complexity

The LG-Nortel 8540 IP phone has an overall component count of 1131 (excluding box contents), of which, 198 are mechanical in nature.

Component counts have a direct bearing on the overall manufacturing cycle times and costs, and also can increase or decrease overall yields and re-work. Our calculations of manufacturing costs factor counts and more qualitative complexities in the design. The cost of manufacturing is also, to some extent, decreased in this case because of assumed labor rate applied for China.

Note that manual labor has a much smaller effect on auto-insertion assembly lines (for the Main PCB, for example), where manufacturing costs are much more capital equipment intensive and driven by these investment costs.

Design Notes

Here is a summary of the major components used in the LG-Nortel 8540 design:

Main PCB


  • Application Processor - Freescale - MCIMX31LVKN5B


  • Ethernet Controller - Micrel - KSZ8842-16MQL


  • SDRAM - Samsung Semiconductor - K4X51163PC-FGC3
  • Flash - Samsung Semiconductor - K9F1G08U0B-PCB00


  • Voice Processor - Fortemedia - FM1093-G


  • Display Module - Chi Lin Technology - LQ057AC213


LG-Nortel 8540 IP Phone - Box ContentsLG-Nortel 8540 IP Phone - Box Contents

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