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Qualcomm braces for China's own 3G tech amid doubt

Written by: Staff
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HONG KONG, Dec 5 (Reuters) U.S. wireless technology firm and chip supplier Qualcomm Inc. is talking to potential Chinese partners to prepare for the launch of third-generation services, but its chief executive questioned on Tuesday the market prospects for a homegrown standard Beijing is pushing.

Many analysts are sceptical about China introducing a domestically developed 3G technology -- which enables blazing Internet access and seamless video -- known as TD-SCDMA, which Beijing is expected to push ahead of other global standards.

And executives and analysts are doubtful on Beijing's express intention to push TD-SCDMA as a global technology, alongside the widely used WCDMA and CDMA2000 standards.

''From a market standpoint, it's definitely got an uphill battle,'' Chief Executive Paul Jacobs told reporters, adding that the world now housed some 400 million 3G users.

''From a Chinese domestic market situation, there's certainly an opportunity for it to be used widely.

''There're a number of chipset vendors that we're talking to ahead of TD-SCDMA's eventual launch,'' he said at the ITU Telecom World 2006 event in Hong Kong. He did not elaborate.

On Tuesday, Jacobs would not be drawn on ongoing legal disputes with some of the biggest names in the telecoms industry over licensing charges. He was ''not optimistic'' about resolving a disagreement especially with Nokia before an April 9 deadline, repeating what Qualcomm executives have said.

Should they fail to reach a deal by then and Nokia does not pay technology royalties as a result, Qualcomm reckons it could shave 4 cents to 6 cents per share off earnings for the fourth quarter of fiscal 2007.

''I'm not optimistic it will happen before April,'' he said.

Jacobs waved off comments by Ericsson CEO Carl-Henric Svanberg, who told Reuters on Monday he was more optimistic that he and other vendors could agree with Qualcomm on lowering royalties -- which Jacobs said was ''one avenue'' under consideration.

Qualcomm's shares have dived about 30 percent in the past six months, partly because of the uncertainty fomented by its legal disputes with Nokia and other firms.

Some of the world's biggest mobile firms complain that Qualcomm charges too much for licence patents for third-generation equipment.

Matsushita Electric Industrial Co. Ltd., Broadcom Corp., NEC Corp., Texas Instruments Inc. and Ericsson have said Qualcomm's fees were far higher than the agreed-upon standard of ''fair, reasonable and nondiscriminatory''.

Qualcomm sells technology licences and chips based on CDMA -- the dominant standard for U.S. cell phones -- as well as those for GSM, the world's most widely used cell phone technology.

Its patents are also used in W-CDMA, known as the high-speed, third-generation standard more advanced than GSM.

REUTERS CS RAI1147

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