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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: foundation who wrote (13630)	8/5/2001 12:42:32 PM
From: grinder965	Read Replies (1) \| Respond to of 196396

Morning Ben, As Dr. J. would say, negotiations should be very very interesting. Could be many factors to consider. Back when negotiations with the Chinese were taking place, there were press reports suggesting that the lower Chinese royalty rate came with other conditions in addition to the lower rate applying only to domestic manufacturers' selling into the domestic market. Other conditions I recall consist of, 1) chipsets have to be purchased from Q, 2) chipset prices were fixed (at $24 to $26?), and 3) the lower royalty rate did not apply to more advanced cdma products. No doubt Q will give something up to the Koreans but I suspect it wont be much. Whatever it is, the price to get into the Chinese market will be well worth it...and then some!

To: foundation who wrote (13630)	8/5/2001 3:56:34 PM
From: Art Bechhoefer	Read Replies (1) \| Respond to of 196396

I believe that earlier news about low royalties for Chinese company sales in China were confined to handsets with low end chips for basic service. Kind of a loss leader strategy. Can anyone confirm this? If true, then the higher royalty rates paid by Korean firms doing business in China would provide an incentive to sell at the high end of the market, where differences in royalties paid by Chinese and Korean companies are minimized. Art

To: foundation who wrote (13630)	8/5/2001 8:35:14 PM
From: Ramsey Su	Read Replies (2) \| Respond to of 196396

Benjamin, looks like we have Korea to thank for finally revealing QC's secret royalty arrangements. I have no reason to doubt the percentages in the article are incorrect. One has to wonder if the Korean vendors have violated some non-disclosure agreements. As for the difference in royalty arrangements, Korea has every reason to protest. First, China basically negotiated a 3.1% built-in advantage over the foreign competitors. Second, it provided a disincentive for domestic Chinese manufacturers to rely on foreign know-how via JV or whatever arrangement which could trigger a much higher royalty rate. However, I wonder if Korea is being short sighted. Sure, they may be at a disadvantage but I suspect that 3.1% is not enough for the Chinese handsets to compete with the more favored foreign brands. Chinese manufacturers would also have to overcome learning pains to remotely come close to the efficieny of scale of the big boys. Samsung, LG, etc should be more concerned about their true competitors for China - ERICY, MOT and NOK.