Qualcomm Inc (QCOM)

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Korea hoping to hang onto CDMA secrets
October 11, 2004

The sale of CDMA source codes by South Korea's Hyundai Syscomm to US based UT Starcom could be heading towards a legal battle as Korea seek to keep its competitive advantage in the CDMA sector.

The Korea Times reported that Hyundai Syscomm does not exclusively own the rights to the CDMA technologies and therefore doesn't have the right to sell CDMA secrets without agreement with co-developers, which includes Samsung Electronics, LG Electronics and the Electronics and Telecommunications Research Institute. The four companies jointly hold the rights to the expertise and means none are able to sell their own partial rights without consent from the other three. But Hyundai Syscomm's former management did not seek approval from the others.

Government regulations also require outbound sale of CDMA expertise, designated as strategic export items, to gain state approval in advance.

Korea adopted CDMA as the national standard in 1995 and deployed the world's first commercial CDMA services a year later. It laid the foundation for the country to roll out the first 3G network using CDMA2000 1x technology in 2000. In 2002 it became the country to launch CDMA EV-DO services, offering faster data speeds than CDMA2000.

Korean mobile handset manufacturers, such as Samsung Electronics and LG Electronics, have also enjoyed success in the worldwide CDMA phone market. But the emergence of Chinese players has threaten mid-tier CDMA handset makers.

The sale of CDMA expertise to UT Starcomm is especially sensitive because UT Starcomm has strong relations with China. It could dent Korea's competitive edge over China, which has been narrowing the technology gap.

Some experts claim the leaked CDMA secrets are mostly 2G technologies and does not threaten Korea's advantage because China have more advanced technologies like EV-DO.

Other critics have said Chinese firms can use the 2G technologies to find a shortcut in narrowing the technological gap.

http://www.3gnewsroom.com/3g_news/oct_04/news_5033.shtml