Qualcomm Inc (QCOM)

[khemara_qc]

Qualcomm may agree to chipset price cut for India

Press Trust of India / New Delhi July 13, 2006

http://www.business-standard.com/common/storypage_c.php?leftnm=11&bKeyFlag=IN&autono=2961

CDMA technology inventor Qualcomm is likely take up the issue of chipset price reduction for the Indian market at its forthcoming board meeting on July 19, which may result in a reduction in prices of handsets.

The CDMA technology licensor's market capitalisation has taken a knock-down of $15 billion, owing to several reasons like Nokia's pull-out of CDMA-based handset market and Reliance Communications' planned expansion into GSM-based mobile services.

During his visit here, Qulacomm CEO Paul Jacobs is believed to have favoured the chipset reduction model over the royalty cut, which he said has no scope for further reduction as being already low. But he had not committed any time-frame for this.

Indian CDMA operators have suggested Qualcomm bring down the chipset cost at par with GSM chipset cost. In low-end handsets (about $40), the CDMA chipset costs $10 while the GSM chipset costs $5. The $5 difference translates into a 12% rise in handset costs. The $10 chipset cost is 25% of the overall handset cost.

Operators are believed to have asked Qualcomm to reduce the chipset prices immediately rather than doing it over a period of time of 3 years.