Qualcomm Passes Handset Division To Kyocera; Demonstrates 3G Technology
N/A (San Diego) has inked an agreement with Kyocera, the large Japanese telecommunications conglomerate. Under the agreement, Kyocera will acquire Qualcomm's terrestrial-based CDMA phone business, including inventory, manufacturing equipment, and customer commitments. In return, Kyocera has agreed to purchase a large amount of Qualcomm's CDMA chip sets, which are used during the development of CDMA products.
Yesterday's agreement comes just over three months after Qualcomm announced its intention to see off the mobile phone unit by the end of the year(see Qualcomm Puts Handset Division Up For Sale; Announces CDMA Technology Development). By signing an agreement with Kyocera, Qualcomm has met this goal.
Driving forces
There were many factors that forced Qualcomm to sell off its mobile phone unit. Increased competition, however, seems to be the main factor.
During a press conference, Irwin Jacobs, chair and CEO of Qualcomm, said that in order for the mobile phone unit to succeed, it needed a strong manufacturing base. Through this larger manufacturing base, the handset division, which achieved $1.4 billion in annual sales, can develop lower cost solutions for the wireless market. Jacobs says Kyocera provides that manufacturing base to the division.
Kyocera offers a variety of services and solutions to the wireless market. In the handset business, the Japan-based company is best known for its CDMA and Personal HandyPhone System (PHS) products, which are targeted at the Korean and Japanese markets.
By acquiring Qualcomm's handset operations, Kyocera has now established a new market for itself in the US, where many CDMA operators such as Sprint PCS use Qualcomm's phones. According to Yasuo Nishiguchi, president of Kyocera, the Qualcomm acquisition also provides the company with a stronger global manufacturing base for CDMA phones.
Deal specifics
Under the agreement, Qualcomm will form a new subsidiary with a substantial number of employees from Qualcomm Consumer Products, as identified by Kyocera. Through a strategic alliance, these employees' services will be contracted to Kyocera on a cost-plus basis to support Kyocera's phone business for up to three years. Selected employees of the joint venture between Qualcomm and Sony Electronics will be transferred to the newly formed unit of Kyocera.
Kyocera's newly formed unit will be a wholly owned subsidiary of Kyocera International Inc. (San Diego), the Kyocera Group's North American headquarters and holding company. This unit will be responsible for integrating Qualcomm's handset design, development, manufacturing and marketing expertise with Kyocera's R&D and technology resources.
For this acquisition, Qualcomm will incur a one-time charge in the first quarter of fiscal 2000 of approximately $30 million before taxes. Other financial details were not released.
3G demo
In a separate release this morning, Qualcomm said its CDMA Technologies division has completed over-the-air phone calls compliant with the industry standard 3G CDMA 1x multicarrier (MC) technology on phones employing the MSM5000 chip set and software solution. By doing this, the Qualcomm CDMA Technologies is attempting to verify the performance of its MSM5000 chip set solution, which is targeted at next-generation handset designs.
The MSM5000 chip set and system software builds upon the architecture of Qualcomm's fifth-generation MSM3000 chip set. The MSM5000 interfaces to Qualcomm's RF devices, the Q5312 analog baseband processor (BBA2), the Q5500 IF receive automatic gain control (AGC) amplifier, the Q5505 IF transmit AGC Amplifier, and the IFR3000 and IFT3000 IF to baseband converters.
Key features of the MSM5000 chip include voice V1 on all radio configurations, packet data P1 using both fundamental and supplemental channels, and support for fast power control for improved voice quality. Pin-compatible with the MSM3000, the MSM5000 will be available in 176-ball fine-pitched ball grid array (FBGA) package and 196-ball plastic BGA (PBGA) packages.
During the trials, Qualcomm said phones incorporating the chip set achieved data rates of 153 kb/s on both the forward and reverse links. By achieving these rates, the new chip set will allow developers to produce handsets that offer higher speed data services.
Sample shipments for the MSM5000 chip set and system software will begin in January 2000. For more information, contact Qualcomm at 858-587-1121.
Edited by Robert Keenan