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Technology Stocks : The New Qualcomm - a S&P500 company -- Ignore unavailable to you. Want to Upgrade?

To: Sawtooth who wrote (6393)	2/9/2000 10:09:00 AM
From: slacker711	Read Replies (2) \| Respond to of 13582

Qualcomm Spearheads CDMA Thrust Into China By Peggy Albright Along-awaited licensing agreement between Qualcomm and China United Telecommunications Corp. may finally pave the way for CDMA technology sales there by a broad array of vendors. Qualcomm announced last week that it completed lengthy negotiations to license its CDMA technology in the potentially huge China market, making concessions on royalties in return for a fat CDMA chip contract that anticipates rapid deployment of a 10 million-subscriber network. The deal marks a high point in the struggle by CDMA backers to crack the GSM-dominated nation: In the past year alone, CDMA has weathered the debates over China's entry into the World Trade Organization, not to mention power struggles over ownership of telecommunications companies. Louis Lupin, Qualcomm's proprietary rights counsel, says the agreement covers the essential business terms Chinese manufacturers will need to meet in order to license Qualcomm's intellectual property, and to make and sell CDMA wireless handsets and infrastructure equipment. Qualcomm says it compromised on the royalty rates it will charge Chinese manufacturers for use of its intellectual property rights, and in return China Unicom committed to plans for deploying a network with capacity to serve 10 million customers within this calendar year. The deal also ensures that Chinese manufacturers will purchase their application specific integrated circuits from Qualcomm as long as Qualcomm's ASICs are competitive in price and function with others on the market Whether the 10 million subscriber figure is reached this year remains to be seen, although China's overall wireless subscriber base is expected to grow by 1 million per month for the next several years. Qualcomm says CDMA vendors now have the go-ahead to begin supplying cdmaOne equipment to China Unicom and its vendors in that country as soon as they can reach contracts. China Unicom currently is soliciting bids from infrastructure vendors. CDMA watchers lauded the agreement as a long-awaited turnaround from China's previous reluctance to give CDMA a foothold. "It's quite positive for CDMA in general," says Brian Modoff, of DB Alex.Brown. The ripple effect from this agreement should benefit other vendors, particularly Motorola and Ericsson, because both can provide infrastructure and handsets, and it will be potentially lucrative for Lucent, Nortel and Samsung, too. Ericsson, which already counts China as its second-largest market after the United States, expects to see a few licensing deals within a short time, enabling it to begin delivering CDMA technology there, according to Ake Persson, president of Ericsson's CDMA systems. Modoff says to watch for additional beneficiaries among subsystem vendors, such as radio frequency power amplifier vendor Powerwave Technologies and point-to-point wireless microwave communications suppliers, such as Digital Microwave. Wireless customers in China mainly use GSM technology provided by the government's China Telecom monopoly. Created five years ago by the Ministry of Information Industry to compete with China Telecom, China Unicom initially operated under control of the People's Liberation Army. Since being absorbed by the MIIð-which also controls China Telecomð-Unicom has struggled to establish its financial footing. Perry LaForge, executive director of the CDMA Development Group, says the final step in opening the market is for China Unicom and other businesses is to "secure enough funding to actually pull this off." Analyst Herschel Shosteck is not optimistic. Considering the history of power struggles over China's telecom businesses and that country's reluctance to see foreign influence there, he says "it's going to be very difficult, if not impossible, for a lot of relationships that appeared to be in the bank to actually come to fruition."