Qualcomm Inc (QCOM)

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Texas Inst sees its WCDMA chips overtaking GSM as soon as '06
By Doug Young

http://asia.news.yahoo.com/041118/3/1rqy6.html

HONG KONG, Nov 18 (Reuters) - Texas Instruments Inc. , the world's biggest maker of cellphones chip, said on Thursday it expects its third-generation (3G) mobile chipset sales to overtake its second-generation chip business as soon as 2006.

"It's probably not next year, but maybe a year after that," Doug Rasor, worldwide strategic marketing manager, told Reuters in an interview at the 3G World Congress in Hong Kong.

Rasor said 3G chip revenues will probably surpass 2G revenues first, because 3G chips are more expensive, with unit sales to follow.

Texas Instruments, which posted third-quarter revenue of $3.25 billion, derives about a third of that from handset chip sales. It supplies about two-thirds of the world's chips for phones using GSM, the second-generation standard for wireless communications.

It now also makes chips for a new generation of phones using WCDMA, the 3G upgrade for GSM that allows for data-rich functions like live broadcast streaming and video downloads.

Mobile phone operators are hoping such premium applications will justify their expense of billions of dollars to buy 3G licenses, upgrade their systems and develop new applications.

Companies with WCDMA services now at or near operation include Europe's Vodafone , Australia's Telstra Corp. , Japan's NTT DoCoMo and France Telecom's Orange .

Reflecting the rapid rise of of its 3G chips, 25 percent of TI's sequential revenue growth for its wireless division in the third quarter came from WCDMA chip sales, Rasor said.

"It's on a hockey stick sort of curve," he said of the growth rate for WCDMA chip sales. "3G is being rolled out pretty aggressively."

Texas Instruments is also hoping to get into the market for 3G handset chips used in CDMA 2000, the world's other major standard for 3G mobile systems and an area dominated by the technology's developer, Qualcomm Inc. .

CDMA 2000 and its predecessor, CDMA, account for about 20 percent of the world's 1.2 billion mobile subscribers, while GSM and WCDMA make up most of the rest.

Rasor said several handset makers are trying out TI's newly developed CDMA 2000 chips, but none have placed major orders yet.

Qualcomm chief executive Irwin Jacobs, also in Hong Kong for the 3G World Congress, previously said his company has recently developed WCDMA chips and eventually hopes take up to half of that market. But he acknowledged that goal would be at least "several years out."