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

To: Maurice Winn who wrote (15106)	9/20/2001 8:05:36 PM
From: pcstel	Read Replies (2) \| Respond to of 196493

Maurice: Because Chinese get such low pay [still coming out of Maoism's great leap backwards] they will be able to export phones really cheaply, even with 7% royalty. Just as the Koreans have decided to set up shop inside China to avoid the 2.5% royalty, and aided with cheaper labor.. Don't you think that they will find a way to export the phones without paying the 7% export royalty?? If one thing the Chinese understand.. That is import/export.. Imagine if you will.. Korean/Chinese JV produces phone in China.. They sell phone to domestic phone distribution company. 2.5% Royalty paid to Qualcomm.. Now Domestic Phone Distributor sells phones to Company B which in turn exports them to some Third World Country like Venezuela or New Zealand. So the phone manufacture did not violate anything.. They sold it in the domestic market!! Since Korea has symmetrical royalties.. You never had to worry about some company pulling the run around on Qualcomm.. But, with China's asymmetrical royalties.. Then this opens the Pandora's box. Suddenly, QCOM is only getting 2.5% royalty on Chinese made lower ASP CDMA phones that end up being exported by Company B!! After all.. at $100.. They are saving $5 per phone in royalties.. Which they can then let their friends over at Company A and B make a buck per phone on the transaction.. It's like the boy who tried to stick his finger in the dyke to stop it from leaking.. As soon as you plug one hole.. Then another one pops up. Qualcomm's only control feature will be ASIC's. If they depend on Qualcomm for ASIC's then they have to toe the line.. The day they start making their own.. Then that will be a whole new ball game..IMO.. BTW.. They say that China Unicom's CDMA subs will top 50 million in 2005.. Have you ever figured the royalties on 50 million $100 phones @ 2.5% royalty... $125 million bucks on 50 million subs!!! Yawnnn!! I think shipping Globalstar phones to warehouses was a better deal!!! (Note: Qualcomm PAID (in theory) Globalstar a $10 per phone royalty that was shipped). PCSTEL