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Cheap Ph :Qualcomm to power Nokia in India

BLOOMBER
Posted online: Friday, September 30, 2005 at 1248 hours IST
Updated: Friday, September 30, 2005 at 1300 hours IST

http://www.financialexpress.com/latest_full_story.php?content_id=104166

SEPTEMBER 29: Nokia Oyj, the world's largest maker of cellular phones, may sell an inexpensive handset in India that uses a chipset from Qualcomm Inc., according to an analyst.


Nokia hired Taiwanese handset maker Foxconn International Holdings Ltd. to make phones that sell for less than $50, said Mike Thelander, a former analyst for Deutsche Bank and founder of researcher Signals Research Group. The handset could be in carriers' testing facilities by the end of the year, he wrote.
The deal could be the break Qualcomm has sought with Nokia, which develops semiconductors with the help of Texas Instruments Inc., the largest maker of cell-phone chips. Nokia has resisted buying from Qualcomm, the No. 2 supplier, and may be looking to the company to boost sales of phones using a technology called Code Division Multiple Access, or CDMA.

“It's meaningful,” said Thelander, who recently traveled to India. “It's good for Nokia, too, in that they don't have anything at the entry level in India. Their phones are popular at the mid-tier and above” in the CDMA market. He said he learned of the possible Nokia-Qualcomm agreement through talks with carriers that he declined to name.

Shares of San Diego-based Qualcomm rose 48 cents to $44.99 at 4 p.m. New York time in Nasdaq Stock Market composite trading, the highest close since December 2000. They have gained 6.1 per cent this year. Espoo, Finland-based Nokia climbed 14 cents to $16.46 on the New York Stock Exchange and has risen 5 per cent this year.

Nokia spokeswoman Arja Suominen said her company never comments on future products. Foxconn declined to comment, said Michael Lin, spokesman for parent Hon Hai Precision Industry Co.

Nothing to Report

Qualcomm had “nothing to report” on it dealings with Nokia, Chief Financial Officer Bill Keitel said in an interview on September 21. “We're hopeful,” he added. Qualcomm spokeswoman Patty Goodwin didn't return phone calls seeking comment.

Nokia makes a wide variety of phones for GSM, or global system for mobile communications, the most popular cell-phone format in India with 79 per cent of the market. Nokia sells 60 per cent of India's GSM phones, Credit Suisse First Boston said.

India's No. 2 carrier, Reliance Infocomm Ltd., had 11.1 million subscribers using CDMA handsets as of August. CDMA serves about 21 per cent of the market, according to industry groups Cellular Operators Association of India and Association of Unified Telecom Service Providers of India.

India's goal to increase subscribers to 250 million by the end of 2007 from the current 62 million could make it the fastest- growing country for handsets in Asia, Thelander said.

Prices

For Nokia to compete in CDMA products, it needs a lower-priced phone, he said. Nokia's lowest price using CDMA is in the mid $60s, compared with about $50 for phones from LG Electronics Inc. and Chinese manufacturers, Thelander said.

Nokia's agreement last February to buy cellular phones with Qualcomm's chipsets from SK Teletech Co., a South Korean cell-phone maker, is no longer valid, said spokesman Insoo Nam.

SK Teletech's parent company, Pantech Co., is gradually scaling back making phones for other companies and intends to strengthen sales of its own brand, Nam said.

Foxconn, which can make 50 million handsets a month, gets as much as 90 per cent of its sales from Nokia and Motorola Inc. Foxconn reported profit for the six-month period ended June 30 rose 66 per cent to $148.9 million as sales nearly doubled to $2.35 billion.

It has plants in China, Hungary, Mexico and Brazil. It had 29,210 employees, mostly in China, as of last September.

Terry Gou, chairman of parent company Hon Hai, is Taiwan's richest person, according to Forbes magazine.