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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: kech who wrote (124972)	10/30/2002 11:19:45 PM
From: Stock Farmer	Read Replies (3) \| Respond to of 152472

Hi Tom, thanks. The scenario which I really believe will pan out is that eventually, Chinese industry will manufacture complete cellphones (not just ASICs or sub-assemblies) and distribute them through the same channels as they use for pocket calculators. Which is to say, globally. And just as they seem to be able to do with calculators, they will subsist on what appear to us as "thin" margins, but which appear to them as "usual" margins. And we'll end up with another case study in history repeating itself. In this scenario they would still use Qualcomm technology but not pay Qualcomm shareholders a dime, and indeed actually create wealth-creation competition for Qualcomm shareholders in the process. So while you asked whether or not Chinese industry would "move up the food chain", I don't think this is a valid question. Or at least it hasn't seemed worthy of their consideration in other industries successfully borged in the past, so I don't know why it would be this time. Personally I think the better question is whether Qualcomm will move up the food chain so that the bulk of their earnings are not so exposed to what appears to be inevitable. Seems to me that a disproportionate part of Qualcomm's business depends on repatriating royalties from handset assemblies, which is exposed to the emergence of one or more nationalist manufacturers with global distribution channels. Which is what the end game in China is setting up to be. To protect the business against such an eventuality, they might want to take profits from the USE of CDMA rather than from the PRODUCTION of the equipment used to deliver it and then stimulate commoditization of the equipment and ubiquity of its deployment. BREW, for example, is a step in the right direction. But are there enough of these steps? I don't know. My concern is that so many people seem to place a lot of value on the Chinese market when I suspect that the net effect over the long term will be detrimental. Speaking as a potential shareholder, that is. John.