BEIJING—Qualcomm Inc. has wagered that licensing versions of its CDMA (Code Division Multiple Access) technology in China will be a major source of its future growth.
Qualcomm, which recently reported its quarterly financial results, said global growth of 3G CDMA is fueling demand for its chip sets. The company went on to say it is pushing aggressively new versions of its CDMA technology, with development in the CDMA2000 1X; CDMA2000 1XEV-DO (Evolution Data Optimized); WCDMA (Wideband CDMA), or UMTS (Universal Mobile Telecommunications System); and GSM1x markets.
Jing Wang, senior vice president and chairman of Qualcomm China told eWEEK.com his company is focused on providing chip sets and software for wireless handset manufacturers, and expects all major interoperability and intellectual property obstacles to be overcome in the near future.
“Interoperability will be achieved through the use of multimode chip sets and multiband handsets in China, and for that matter, throughout the world,” Wang said, adding that Qualcomm is working with China Unicom on blending network technology in order to ensure a seamless handover for customers between GSM and CDMA2000 networks.
And while Qualcomm is developing new ways for various enterprise wireless network technologies and standards to work together, the company is steadfast in protecting the intellectual property rights it has developed.
“There are issues as it regards to intellectual property protection, but we expect all royalty and licensing issues will be resolved,” Wang said. At issue is whether the Chinese government will pay Qualcomm royalties for the development of TD-SCDMA (Time Division Synchronous CDMA), its homegrown standard aimed at providing improved security for wireless networks. Qualcomm claims the kernel of the technology comes from its version of CDMA.
Wang said Qualcomm already has more than 100 key patents for its technology registered in China, and is working closely with the government to resolve any outstanding issues.
“We have licensed a total of more than 20 leading Chinese vendors for our CDMA2000 technology,” Wang added, saying Qualcomms CDMA technology will play a significant role as 3G networks are rolled out in China.
Qualcomm Leverages CDMA Position in China – Page 2
Qualcomm is also investing directly in China and this week announced a $14 million round of financing for China-based phone designer Techfaith Wireless Communication Technology Ltd. The company will design phones based on Qualcomms CDMA2000 standard for improved voice traffic and higher data transfer rates.
In a separate development, Qualcomm and Techfaith said theyve inked a licensing deal to manufacture data modem cards based on cdmaOne and CDMA2000 X/1xEV-DO wireless data communications standards.
Qualcomm says it has completed testing of the 1xEV-DO Revision A standard, which supports peak data rates of 3.1 M bps on the forward link and 1.8 M bps on the reverse link. EV-DO is a 3G technology that allows for fast data transmission rates, and it is still unclear whether it will compete or coexist with Wi-Fi services.
“The cities of China have huge potential for use of sophisticated data and wireless multimedia services,” Wang said.
Qualcomm also said it is considering potential outsourcing options for its mobile phone chip sets, as its U.S.-based suppliers cant meet all the demand the company has from vendors worldwide.
The biggest supply constraints for Qualcomm are for its lower-end chip sets, as demand for inexpensive mobile phones in less-developed countries grows at a rapid pace. Two Chinese semiconductor companies considered candidates for Qualcomms potential chip-making outsourcing contracts include Semiconductor Manufacturing International Corp. and Grace Semiconductor, both based in the Shanghai region.
Qualcomm has said it expects to sell close to 14 million chip sets in China during the current fiscal year for sales of approximately $280 million.
Last year, Qualcomm said it planned to invest up to $100 million in a variety of wireless businesses in China, and the company is expected to announce details of some of those awards in the very near future.
Investment research analysts at Hilliard Lyons recently reiterated their “long term buy” rating on Qualcomm. Hilliard Lyons cited increased demand for Qualcomms chip sets, better-than-expected handset ASPs and robust performance of the CDMA market. Analysts said India and China are driving Qualcomms CDMA growth, and the companys future prospects hinge on acceptance of WCDMA technology.