Qualcomm Inc (QCOM)

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Qualcomm may favor China in contract



SEOUL, South Korea, March 27 (UPI) -- Qualcomm Inc.'s royalty policy has angered some Korean telephone manufacturers who believe the U.S. chipmaker favors China over Korea.

Korean cell phone producers that make code division multiple access phones pay a fixed 5.75 percent royalty for export and 5.25 percent for local sales to the San Diego-headquartered Qualcomm.

However, the Korea Times reported exclusively Saturday that a firm in China said Qualcomm's royalty 2.65 percent for local sales and 7 percent for offshore shipments.

The 10-year China contract also reportedly says export royalties will be cut to 5 percent after three years, "if more than 100,000 such subscriber units (handsets) are sold in the applicable calendar (year) in overseas markets.

While the contract applied to one Chinese manufacturer, Hwang Tae-kyung, of the trade group, Information and Telecommunications Intellectual Property Association, said the same terms would apply to others.

"Because Qualcomm has a policy of setting the same royalty rates for firms of the same country, the royalty level will be identical for all Chinese companies, said Hwang. "I have a copy of a contract between Qualcomm and another Chinese company, which stipulates the same rates."

http://www.washtimes.com/upi-breaking/20040327-082122-8663r.htm