Qualcomm Inc (QCOM)

[khemara_qc]

S. KOREAN FIRMS PAY QUALCOMM $US1.43BLN IN ROYALTIES

Thursday September 22, 2005, 11:14 am

http://au.biz.yahoo.com/050922/17/9rqj.html

SEOUL, Sept. 22 Asia Pulse - Qualcomm Inc., a United States developer of wireless communication technology, had collected a total 1.48 trillion won (US$1.43 billion) in mobile phone royalties from South Korean handset manufacturers between 2002 and 2004, a government report showed Thursday.


Royalties earned by Qualcomm, which holds the core technology used in code division multiple access (CDMA) mobile phones, from South Korean companies including Samsung Electronics Co. and LG Electronics Inc. stood at 536.1 billion won in 2004, compared with 524.5 billion won in 2003 and 420.2 billion won in 2002, the Ministry of Information and Communication said in the report.


The report was submitted to ruling Uri Party lawmaker Seo Hae-seok, a member of a parliamentary committee on science, technology, information and telecommunication, as the National Assembly launched a government-wide audit on the same day.


While Qualcomm developed the core CDMA technology, South Korean companies were the first in the world to commercialize it.


Under the agreement, Qualcomm collects 5.25 percent of revenue from local sales of CDMA handsets in royalties and 5.75 percent of CDMA export earnings from Korean manufacturers, according to people familiar with the matter.


In South Korea, home to the world's third and fourth largest handset makers, Samsung and LG, respectively, the large payment of royalties to Qualcomm has become increasingly contentious as mobile phones become more and more sophisticated.


A senior broadcasting regulator recently urged Qualcomm to resolve its royalty dispute on high-end mobile phones in South Korea to promote the nation's land-based digital television service for cellular phones.


South Korea has one of the world's most ambitious policies to introduce terrestrial digital multimedia broadcasting (T-DMB) services, allowing users to watch crystal-clear TV programming on their mobile phones.


However, the project's business perspective remains unclear, mainly because of the higher handset prices.


"Qualcomm's royalties on mobile phones are the biggest possible obstacle to the successful takeoff of T-DMB services," Lee Hyo-sung, vice chairman of the Korea Broadcasting Commission, was quoted as saying by the Digital Times on Tuesday.


"The problem is that Qualcomm's royalties are imposed on handsets, rather than on its core CDMA technologies," Lee said.


The broadcasting regulatory officials have argued that Qualcomm needs to revise its royalties on the high-end mobile phones in a bid to lower handset prices.


Officials at Qualcomm's Korean unit were not immediately available for comment.


(Yonhap)