For Qualcomm Inc., Siemens A.G. was the last holdout among the top five cellular handset makers to choose CDMA for its next-generation offerings. But last week, Qualcomm and Siemens announced that the Munich, Germany, powerhouse will license W-CDMA technology from Qualcomm for its third-generation (3G) handsets and equipment.
"This [agreement] demonstrates Siemens' recognition of W-CDMA, like the rest of the large handset manufacturers," said Steve Altman, executive vice president and president of technology licensing at Qualcomm, San Diego. "They were the last of the major telecom equipment makers to adopt all of the CDMA standards."
Under terms of the deal, Siemens has been licensed by Qualcomm to make and sell infrastructure and subscriber equipment for CDMA wireless systems. The contract also grants Qualcomm a royalty-free license to sell CDMA ICs and chipsets based on Siemens' patented technologies.
Siemens has not yet announced the semiconductor manufacturer that will supply CDMA chipsets for its 3G equipment and cell phones, Altman said.
The new accord follows a deal between the two companies in 1996, when Siemens licensed CDMA technology from Qualcomm for second-generation handsets and equipment.
The agreement underscores how Qualcomm's W-CDMA technology "is clearly the technology of choice for 3G," said Todd Koffman, an analyst at Raymond James & Associates Inc., St. Petersburg, Fla.
"I think the debate about what technology 3G is going to be has been put to bed," Koffman said.
The Qualcomm-Siemens agreement also demonstrates how demand for next-generation CDMA equipment and chipsets continues to attract new entrants despite an otherwise lackluster year for the wireless telecommunications industry.
In July, Qualcomm struck CDMA licensing arrangements with France's Alcatel S.A. and Japan's NEC Corp., in which the companies will add the technology to their telecom infrastructure and cell phone IC portfolios.
Though cellular handset sales are expected to remain flat or even decline by up to 10% compared with last year, CDMA technology is assuming a greater percentage of the pie. CDMA-based handset subscriptions are expected to increase by more than 35% in 2002, to 158 million from 115 million a year ago, according to Frost & Sullivan, New York.
But despite the influx of CDMA players, all is not rosy for 3G networks, which essentially don't yet exist beyond the R&D and pilot stage. Docomo of Japan, which rolled out the world's first 3G network last year, has run into problems, said Koffman, who projects widescale 3G deployment will take as long as four years.
"IT has been a disaster for Docomo," he said. "They've had difficulty building the networks, and their subscription base is less than 35,000. The technology is not all the way down the learning curve."