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Samsung gets an OEM chip contract

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Nov 23,2005
The U.S. wireless chipmaker Qualcomm Inc. has signed a partnership deal with Samsung Electronics Co. to allow the Korean company to produce cellular phone chips, the U.S. company’s Korean unit said yesterday. Under the agreement, Samsung will make Qualcomm’s chips used in code division multiple access cell phones on a contract basis, Qualcomm said in a statement. Financial details were not disclosed. Qualcomm owns most of the key patents for CDMA technology, a system that ranks a distant second in global popularity with about a quarter of the market. The competing GSM technology is more widely used. The U.S. wireless juggernaut also holds some patents on wideband CDMA, a third-generation mobile technology that offers faster Internet connections over cellular phones. Aside from sales of lucrative chipsets for mobile phones, Qualcomm collects royalty fees from all CDMA-based handset makers and some GSM-based mobile phone manufacturers. Samsung Electronics, the world’s third-largest handset maker, is one of its major clients. The partnership between Qualcomm and Samsung, the world’s largest manufacturer of computer memory chips, is expected to spark a big change in the global chip foundry business, some analysts here say. While CDMA handsets are popular in the United States and Korea, GSM handsets are mostly used in Europe and other parts of the world. “Our foundry agreement with Samsung will provide an additional supply source and assist us in our strategy aimed to ensure capacity to support growth in both the CDMA and wideband CDMA markets,” Sanjay Jha, president of Qualcomm’s CDMA technologies division, said in the statement.


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