Replies to post #4655 on Qualcomm Inc (QCOM)

[kechuwa3]

Getting closer, but it depends on what you mean by the "full royalty". (Hope this is clearer than what the definition of "is" is. <gggg>

As I said there are two royalties. Qualcomm still gets its full handset royalty but doesn't get its chipset royalty. Though, as DR said, in return for not getting its chipset royalty, it gets the right to make things like integrated CDMA/GSM chipsets with GSM IPR that it doesn't have to pay for.


See previous post for comment on the two royalties:

The confusion here is that there are two royalties:
1) Chipset royalty.
2) Handset royalty.

TI's cross license allows them to avoid 1) but its customers can't avoid 2).

[richbloem]

Ihavenoidea, let me try to confuse you more. Those that have answered are correct but there is more to the story.

Qualcomm has more than 90% of the market for CDMA ASICs. Not Good to have that much power---customers are nervous and resentful.

Qualcomm makes their own DSP chips. TI is the leader in this technology. Qualcomm needs access to TI's DSP and GSM technology and patents.

TI wants to make CDMA and WCDMA ASICs. They need access to Qualcomm's technology and patents.

The simple answer to the above problems are to sign royalty agreements between each other which would turn out to be a wash (cancel out each other) OR to sign royalty free agreements between each other.

The net effect is Qualcomm gained royalty free access to all of TI's patent portfolio (which is substantial) and TI gained royalty free use of Qualcomm's patent portfolio.

Qualcomm is probably the winner here because of the extreme difficulty in designing state of the art CDMA chips. Many have tried and many have failed. So, it may be years before TI is a force in the CDMA market. In the meantime, Qualcomm's market share may slip (which it should) but their overall sales will increase faster than the market share decreases.