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Hi all,
This is a letter from IJ to BusinesWeek re:recent article "Hanging Up On Qualcomm".


Letter to Editor of Business Week from Dr. Irwin M. Jacobs, chairman and CEO of QUALCOMM

July 17, 2000
Business Week

Dear Editor:
Perhaps I should be pleased with the title of your article "Hanging Up on Qualcomm; Qualcomm's CDMA cell-phone system is losing out to a European standard" (July 24, 2000), since it is a mark of the success of CDMA that many now claim to be its parent. WCDMA, the so-called European standard, is in fact based on QUALCOMM's inventions and is a revolutionary change from the TDMA technology used in GSM in Europe to CDMA pioneered by QUALCOMM. We welcome and support this change. QUALCOMM has a large and growing pool of CDMA patents, applicable to both voice and the increasingly important business of wireless Internet access. QUALCOMM was inventing the technology while others were claiming it would not work or not be a commercial success. Although others have expended considerable efforts to work around a small number of our patent claims, with a measurable negative impact on performance, our patent coverage of the standard is ubiquitous and WCDMA manufacturers will need a license from QUALCOMM. We are extending our licenses to WCDMA with the same (reasonable) royalty rate that applies to cdmaOne and cdma2000. Many leading manufacturers have already signed up and more will be announced soon.

South Korea has been and remains a crucial market for QUALCOMM. CDMA remains an important product to Korea since it is now a major export for Korean manufacturers. South Korea will be the first nation in the world to field a commercial third-generation system according to announcements by SK Telecom and KT Freetel. Both are using cdma2000, not WCDMA. The inept reference to "dumping of QUALCOMM technology" refers to the technology choice for new spectrum yet to be licensed. I doubt that there is any intent to use TDMA or another "XDMA" in Korea's third generation. Thus, no dumping will occur and users of the new spectrum will also benefit from QUALCOMM technology.

QUALCOMM currently supplies a very high percentage of the CDMA chips used in mobile phones worldwide. Other companies have made major efforts to compete, but have not been successful because of the expertise in CDMA that we bring to our chipsets. We intend to build on this great lead in CDMA chip technology to be the dominant supplier in third-generation CDMA as well.

UK operators have paid approximately $37 billion dollars for licenses to third-generation technology, and their intent is to install third-generation CDMA. DoCoMo in Japan is planning a trial WCDMA system in 2001. Rather than concern about our "prospects around the globe looking increasingly shrunken," I am kept awake nights by concern that WCDMA will be delayed or not work well and thus the upgrading of the whole world to CDMA, whichever flavor, might be delayed where cdma2000 is not selected.

Dr. Irwin M. Jacobs
Chairman and CEO
QUALCOMM Incorporated

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