Nokia's plan to ramp down R&D will not impede CDMA2000 growth

June 26, 2006

QUALCOMM said it does not expect Nokia's announced plan to ramp down its CDMA2000 R&D and manufacturing to impede the growth of CDMA2000 or to impact QUALCOMM adversely. Despite its efforts over the past several years to increase its share of CDMA2000 handset sales, Nokia has had very little success in competition against many of QUALCOMM's other licensees and chipset customers. In addition, Nokia has not contributed to the development of CDMA2000 around the world, preferring to focus instead on GSM where Nokia controls a dominant share of the handset market in many countries enabling Nokia to maintain high prices and margins.

The CDMA2000 handset business is highly competitive with participation from many capable manufacturers of all sizes around the world due in large measure to QUALCOMM's widespread licensing and multi-tiered supply of enabling chipsets and software. In the face of this stiff competition, Nokia's vertically integrated business model failed to capture the same dominant share of handset sales in the CDMA market segment to which Nokia has become accustomed in the less competitive GSM environment. Given the dependence of Nokia's business model on achieving and maintaining dominant market shares, Nokia's announced decision to exit much of the CDMA2000 business was inevitable.

"In view of Nokia's existing small presence in CDMA2000, we do not believe that Nokia's decision to ramp down will have any impact on the continued growth of CDMA2000 or any adverse effect on QUALCOMM," said Steve Altman, president of QUALCOMM. "QUALCOMM, of course, will continue to allocate substantial resources in expanding the CDMA2000 market and we will continue to work in close partnership with our many other licensees."

"As far as news articles reporting or implying that QUALCOMM's licensing terms resulted in the failure of Nokia to complete its previously announced joint venture with Sanyo," said Altman, "these are simply untrue. The joint venture company was planning to operate under Sanyo's existing CDMA license agreement with QUALCOMM, and no changes to the existing license agreement were required or requested."