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Qualcomm royalties lower for China

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Mar 30,2004
Qualcomm, a wireless telecommunications company based in the United States, charges Chinese mobile handset makers lower royalties than what it charges Korean companies, according to sources yesterday. Qualcomm has the source technology for the code division multiple access (CDMA) standard, which was adopted by Korean cellular phone service providers. Korean companies commercialized the technology for the first time in the world, and have paid more than 2 trillion won ($1.7 billion) in royalties to Qualcomm so far. According to a 2001 contract between Qualcomm and a Chinese company, the Chinese company must pay 2.65 percent of the mobile handsets’ sale prices in the domestic market as royalties. Korean companies pay 5.25 percent, the JoongAng Ilbo found. Chinese companies have to pay 7 percent in royalties for mobile phone exports, which is currently higher than the 5.75 percent that Korean companies pay. But after three years, the rate must be cut to 5 percent if China’s exports exceed 100,000 handsets per quarter. Qualcomm has promised that it would treat Korea as the most favored country. This is the first time that evidence has appeared to the contrary. by Chung Sun-gu


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