Small telecom firms snapped up

Bulldozed by major firms and wrung dry by the sluggish economy, small companies in the mobile phone industry are pursuing deals with overseas companies by forming strategic alliances or selling their technology. “Korean companies have the technologies but not the money, and foreign companies are in desperate need of the technologies,” an industry analyst said. Most recently, UTStarcom, a U.S.-based technology firm that operates mainly in China, bought certain departments of Giga Telecom, a maker of cell phones that adopt the CDMA, or code division multiple access, standard. The company announced on Friday that through its Korean subsidiary, UTStarcom CDMA Technologies Korea, it signed a contract to obtain research and development facilities, CDMA handset-related intellectual property rights, and certain key personnel. The deal was worth about $14.6 million, with up to $4 million in additional payments upon the completion of technology transfer. The company also acquired CDMA-related patents from Hyundai Syscomm earlier in March. Israeli design firm Emblaze Mobile Ltd., a wholly-owned subsidiary of the communications group Emblaze, is investing $31 million over the next three years in Innostream, a Korean developer of multimedia mobile handsets. The company announced last month that it is providing $15 million immediately in cash for inventory and working capital and that it will develop mid-range and high-end handsets. The condition was that Innostream merge with its affiliate Innolinx, which develops software for Innostream phones. Innostream specializes in developing customized cellular phones on a contract basis ― mainly those that follow the European GSM mobile communication standard. Motorola raised its 53 percent stake in Appeal Telecom to 99 percent in June. In October, it took over Appeal entirely by obtaining its manufacturing facilities in Deok-pyeong and research facilities in Bundang. The acquisition will strengthen its position in the Korean market, a Motorola official said. Maxon recently signed a letter of intent with a telecom company in China, after talks did not go well with SK Teletech. Bellwave, another small cell phone maker, is seeking ties with Siemens and Alcatel. “Now that mobile phone manufacturing technology is widespread, marketing skills are more important than technologies,” said Lee Seung-hyuk, an analyst at LG Investment and Securities. “Unfortunately, small companies don’t have the money, which is why they have to sell their technologies, rather than develop their own brands.” by Wohn Dong-hee