Qualcomm Inc (QCOM)

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Seoul may intervene over Qualcomm royalties -reports
Tuesday March 30, 11:05 pm ET


SEOUL, March 31 (Reuters) - South Korea is considering taking action over reports that Qualcomm Inc. (NasdaqNM:QCOM - News) charges local firms more in royalties to use its wireless technology than Chinese rivals, media reports said on Wednesday.

Qualcomm said it was unable to comment on the issue and government officials could not immediately be reached to verify the reports.

China is the world's largest mobile market with 280 million subscribers and is considering whether to adopt Qualcomm's standard for third generation (3G) phones, a decision that could generate billions of dollars in sales of equipment and royalties.

The Yonhap News agency said it had obtained a copy of Qualcomm's contract with a Chinese firm that showed the Chinese firm paid 2.65 percent of the price of a mobile phone in royalties for the U.S. firm's patent based on CDMA, or Code Division Multiple Access, around half the 5.25 percent paid by South Korean firms.

"We're unable to comment due to a confidentiality agreement," said Kim Seung-soo, a Qualcomm spokesman in Seoul.

The South Korean government was considering counter measures after concluding Qualcomm had breached its promise to provide Korea with the most favourable treatment, the Chosun Ilbo newspaper reported, citing unidentified officials at the Information and Communication Ministry.

Officials in charge of royalties for technology at the ministry could not be reached for comment.

Qualcomm owns most of the patents based on the CDMA standard for wireless networking, which is most popular in the United States, but also widely used in Asia.

The San Diego-based company counts companies such as South Korea's Samsung Electronics Co. Ltd. (KSE:005930.KS - News) among its largest customers. It expected an increase of around 27 percent in CDMA phone sales worldwide this calendar year.

A Samsung official said the royalty issue was a matter for the government to deal with.

http://biz.yahoo.com/rc/040330/telecoms_korea_qualcomm_1.html