SAN DIEGO -- June 8, 2000 -- Qualcomm Incorporated (Nasdaq: QCOM) issued the following statement clarifying the Company's unique position with respect to its Code Division Multiple Access (CDMA) intellectual property rights and the deployment of third-generation (3G) systems.
Qualcomm welcomes the worldwide resources that are being devoted to roll out third-generation CDMA technology, including Multi-Carrier (cdma2000™ 1xMC and HDR in 1.25 MHz bandwidth, and 3xMC in 5 MHz bandwidth) and Direct Spread (WCDMA in 5 MHz bandwidth). Qualcomm owns a substantial portfolio of CDMA patents, including many "essential" patents that are necessary for the deployment of any proposed 3G CDMA system, such as Multi-Carrier, Direct Spread, and another system referred to as TD-SCDMA.
Qualcomm has now granted royalty bearing licenses to more than 75 manufacturers for CDMA and, as part of these licenses, has transferred technology and know-how in assisting these companies to develop and deploy CDMA products. A significant number of these companies' licenses cover third-generation applications, including WCDMA, 1x and High Data Rate (HDR). Under terms of Qualcomm's existing 3G licensing agreements, a licensee will pay the same royalty to Qualcomm for 3G systems, including WCDMA, TD-SCDMA and 1x, as that licensee pays Qualcomm for today's CDMA infrastructure, phones and test equipment.
Qualcomm will aggressively enforce its patent rights around the world and unlicensed companies that supply products for 3G CDMA systems, such as WCDMA, as well as companies that use such products from an unlicensed supplier will be infringing Qualcomm's patents. Qualcomm expects to charge the same royalty rates for all third-generation products as it does for 2G (IS-95A), 2.5G (IS-95B) and 3G CDMA 1x, but, because terms and conditions may change over time, Qualcomm has reserved the right to adjust its license terms and conditions, including increasing its royalties, for those companies that delay in entering into a license with Qualcomm.
The Company expects that 1x will be the world's first commercial third-generation wireless technology, initially in use by the end of this year and widely available in 2001. Because of its high spectral efficiency and limited bandwidth requirement, both cdmaOne™ and non-CDMA operators can easily transition to 1x, achieving increased network capacity, higher quality and the ability to offer high-speed wireless Internet access sooner while supporting existing and new users. Qualcomm believes that a great advantage is gained by early entry with CDMA and that it would be wasteful to pour billions of dollars into non-CDMA technology that will be shortly outdated.
Qualcomm understands that China Unicom is considering the deployment of CDMA 1x and possibly HDR for 3G. Such a deployment of third-generation technology in standard CDMA bandwidth would provide greater capabilities than achieved by a later adoption of wider bandwidth WCDMA and ensure that consumers enjoy the benefits of CDMA one to two years sooner.
The Company welcomes the eight domestic Chinese manufacturers to date that have signed CDMA intellectual property research and development agreements, under which Qualcomm will provide chipsets and system software, and relevant documentation required for CDMA research and development. Qualcomm will work closely with these manufacturers to develop CDMA-based wireless communications technology for China. These agreements allow the manufacturers to develop handset and base station prototypes based on IS-95 A/B and 1x standards. The manufacturers have the option to secure commercial licenses at any time during the terms of their R&D agreements.
Qualcomm Incorporated (www.qualcomm.com) is a leader in developing and delivering innovative digital wireless communications products and services based on the Company's CDMA digital technology. The Company's business areas include integrated CDMA chipsets and system software; technology licensing; Eudora® email software for Windows® and Macintosh® computing platforms; satellite-based systems including portions of the Globalstar™ system and wireless fleet management systems, OmniTRACS® and OmniExpress™. Qualcomm owns patents which are essential to all of the CDMA wireless telecommunications standards that have been adopted or proposed for adoption by standards-setting bodies worldwide. Qualcomm has licensed its essential CDMA patent portfolio to more than 75 telecommunications equipment manufacturers worldwide. Headquartered in San Diego, Calif., Qualcomm is included in theS&P500 Index and is a 2000 FORTUNE 500® company traded on The Nasdaq Stock Market® under the ticker symbol QCOM.
Except for the historical information contained herein, this news release contains forward-looking statements that are subject to risks and uncertainties, including: the risk that 1x may not be deployed as the first commercial third-generation technology or in a timely manner, HDR technology may not become commercially deployed and that CDMA will not be commercially deployed in China, risk associated with timely product development, the Company's ability to successfully supply significant quantities of CDMA components on a timely and profitable basis, change in the economic conditions of the various markets the Company serves, as well as the other risks detailed from time to time in the Company's SEC reports, including the report on Form 10-K for the year ended September 26, 1999, and most recent Form 10-Q.