Tony: The issue of how QCOM was able to terminate its license to VLSI/Phillips lies in the following quote, which is taken from a must read article on CDMA that is linked below:
ô[Philips/VSLI] no longer has a license,ö said a
spokeswoman for Qualcomm, San Diego. ôBecause VLSI
was acquired by Philips, VLSI is no longer granted a
licenseö for the chipset technology, she said.
The Qualcomm spokeswoman explained that the terms of
the original licensing deal changed after Philips acquired
VLSI last June for about $1 billion. She declined to say when
the agreement was terminated, but noted that Philips still
has the opportunity to participate in the CDMA-based
chipset market if and only if the Dutch-based company
renegotiates a new contract with Qualcomm.
Message 11219206
Thus, LSI is not in any immediate threat of losing its license, but this issue should be kept in mind when one is thinking of any potential takeover premium of LSI, since it would appear that such a takeover would obviate the CDMA license that LSI currently holds.
What I find interesting is the fact that the above article clearly suggests an exploding market for CDMA with ample room for a second major player. That player will come from one of four candidates—Motorola (never bet on my fellow NU alum Chris Galvin, who would be better off running a junior high school), DSP Communications, Prairie Comm and Nokia. Of these four, Motorola and Nokia are competing only as their own OEM suppliers. Thus, it would appear that in the independent market for CDMA, LSI has only two competitors to become the number two supplier next to QCOM. Thus rather than being bad news for LSI, this news is very good news. Having said that though, these gains may be chimerical, since it appears that what this termination is really about is renegotiating a better
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