Replies to post #4658 on Qualcomm Inc (QCOM)

[kechuwa3]

Which brings up another topic. Wouldn't it be to Q's advantage if China didn't choose 3G this year? If GSM1X becomes first to market early next year it will kill any WCDMA competitor, it seems to me we'd be better off if China Netcom, Mobile, etc. had this info in hand before they choose which system (1X, W, or TD [too bad GPRS and Edge]). Most of all it might be best for MII before they made their decision.

I guess I don't think GSM1X success matters much for CT and CN since they don't have GSM installed already. It does matter for China Mobile's decision, but if anyone goes WCDMA rather than CDMA2000 it would probably be them. GSM1X matters for Unicom but they are already the ones exploring it.

I tend to think that the sooner 3G is announced the better since CDMA2000 is known to be successful and all the doubts are about the WCDMA track. If it is is "sooner" it almost has to be CDMA2000 for either CT or CN or both. If it is later, it is possible that WCDMA could have some viability, unless of course by waiting, the problems of WCDMA become more apparent. But keep in mind, as CT and CN wait, Unicom is getting a stronger and stronger foothold in data with CDMA1x. So CT and CN can't wait too long or the window of opportunity to get a viable mobile position will be lost for them.

[richbloem]

Ihavenoidea, I would remind you and others that the most benefit to Q (and therefore we stockholders) is the earliest possible volume sales of WDMA and CDMA2000. Don't forget that even though Q's position is that CDMA2000 is their preferred specification, they get the SAME royalties on either system. It is very much to our advantage to have WCDMA be successful and stop this war of the American's tech vs the Euros tech.

Qualcomm will be very successful selling into either market and will gain the same royalties. The constant push out of massive 3G sales is not good for us even though CDMA2000 has front runner status. The black eye that WCDMA is receiving is hurting the entire 3G scheme and we suffer along with all of the others.

[Jim Mullens]

I, Re: royalty questions. I believe Qualcomm has stated in their presentations that the royalty received from chipset sales is minor in comparison to handset royalties. Qualcomm chipsets ASP have been in the $24 range, or roughly less than 15% of the handset ASP.

Re: “Wouldn't it be to Q's advantage if China didn't choose 3G this year?”

Qualcomm benefits the sooner 3G networks are commercially viable. Qualcomm will receive royalties on both CDMA2000 and WCDMA, and no doubt TD-SCDMA. Qualcomm’s chipset market share should be larger with CDMA2000 than WCDMA, but the jury is still out on that. Qualcomm has stated their target to be at least 50% of the WCDMA chipset market.

Qualcomm will begin to receive revenue from the MSM6300 dual mode (GSM/GPRS- CDMA2000) chipset next year as handsets using that chipset can operate on the Unicom GSM network even before GSM1X is installed. Their GSM subs will then be able to access the CDMA network for 3G 1X services. The GSM1X overlay onto their GSM networks will give the added benefit of almost doubling voice capacity plus increased coverage of CDMA 1X on the portions of their GSM network that has been upgraded.

FA00 believes 3 to 5 of China’s 3G carriers will choose CDMA2000 and that CDMA in the rural areas using 450mhz will be huge.

If the decision had to be made today, with the Ev-Do experience in Korea proving to be very successful and the still many unresolved WCMDA issues, CDMA2000 would have to be the choice based on merit. The longer WCDMA continues to experience difficulties, the more likely CDMA2000 becomes the choice. With Unicom’s 1X network now operational, competition will mount for the other carriers to offer 3G services. This is not the case in Europe, as FA00 pointed out, as there is no competition in Europe to force the carriers to move sooner to 3G.

My feeling at this point is the sooner the 3G licenses are awarded, the better it is for Qualcomm and its investors. Qualcomm wins in either case.

Jmho- jim