Qualcomm Inc (QCOM)

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BUMPY ROAD AHEAD OF SAMSUNG'S CDMA CHIP INITIATIVE
Asia Pulse
SEOUL, Oct 7


Samsung Electronics Co. (KSE:005930) is facing an uphill battle in commercializing its less-publicized cell phone that contains its own CDMA2000 1X chips.

Last May, the world's third-largest handset manufacturer quietly released the new SPH-X9000 phone, pinning its hopes of reducing its heavy reliance on chipsets made by U.S. wireless firm Qualcomm Inc.

Since early 2000, Samsung Electronics has developed its own chipsets for the 1X network, which offers an early glimpse of third-generation (3G) features such as video-on-demand and picture-messaging services.

So far, things do not seem to be going well. As of end of September, a total of 80,000 SPH-X9000 phones were shipped to local consumers, but minuscule 4,800 handsets were sold, according to officials at KTF, the nation's second-largest wireless operator.

The SPH-X9000 phone is only available for KTF subscribers.

"For a start, consumers seem unimpressed because the phone has no capability of snapping photos," said a KTF official, who asked not to be named.

"Missing a photo-taking function is one of major reasons for sluggish sales of the phone," the official said.

In South Korea, which has around 33 million mobile phone subscribers in a population of 48 million, it has become a commonplace sight that people wielding camera-equipped handsets.

"Some users also complain of inadequate battery life and lost text messages," the official added. Experts said the phone might drain the power when users download large amount of data.

To avoid unnecessary feud with Qualcomm that dominates CDMA chipsets worldwide, Samsung Electronics didn't launch an ad campaign for the ambitious phone.

Qualcomm holds CDMA, short for a core code division multiple access, technology used in mobile phones and Korean companies were the first in the world to commercialize it.

Qualcomm collects 5.25 per cent of local sales of handsets in royalties and 5.75 per cent of exports from Korean manufacturers. Between 1995 and 2002, Samsung Electronics had paid a total of 816.5 billion won (US$680 million) to Qualcomm, according to a government data submitted to an annual audit session of the Ministry of Information and Communication.