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					Qualcomm´s Multi-lemma

1) Introduction to the highly systemic wireless industry

2) Challenges that Qualcomm faces
    – Within the Cellular industry Qualcomm faces the challenge
        of a new standard - WCDMA.
    – Within the larger Wireless Industry Qualcomm faces the
        challenge of another new standard – WI-FI (802.11)

3) Wireless data opportunities

 December 8, 2003                                                 2
Cellular System Components Overview

                       Mobile Phone

                               Air Interface & Frequency

                      Antenna &
                     Base Station

                                 T1, T3 lines

                    Backend Equipment –
                    Switching, Billing etc.

December 8, 2003                                           3
    Cellular Technologies
•     Analog – Uses the complete frequency for one call.

•    Time Division Multiple Access (TDMA) – Divides the frequency into
     time slices, e.g. US-TDMA and GSM.
     •   Analogous to many pairs of people speaking with pauses that are so
         small that no one notices the delay.

•    Code Division Multiple Access (CDMA) – Call signals are transmitted
     simultaneously, but using different orthogonal codes.
     •   Analogous to many pairs of people speaking simultaneously in
         mutually exclusive languages.

     Advantages of CDMA
     •  10-15 Times the Capacity Improvement
     •  Lower power usages => longer battery life and less over heating
     •  Geared for Data

    December 8, 2003                                                      4
Cellular Systemic Industry – 2G
                            CDMA                     GSM
                       (20% of World            (70% of World
                          Market)                  Market)
                      QCOM – 5% royalties     Nokia, Ericsson,
                                              Siemens, etc.

Chips &              QCOM – 95%, MOT,        Nokia, Ericsson,
Software Stack       LSI, Samsung etc.       Siemens,etc.

Phone                 Samsung, LG, Sanyo,    Nokia, Ericsson,
                     Sony-Eric, Motorola.    Motorola etc.

                     LU, NT, Eric etc.       Nokia, Ericsson,
                                             Siemens, Alcatel etc.

Service               Verizon, Sprint PCS,   Nextel, Cingular,
Providers             South Korea etc.       T-Mobile, Europe etc.

  December 8, 2003                                                   5
Mobile Market

                   GSM market


December 8, 2003                6
Cellular Systemic Industry – 2.5/3G
                         CDMA-2000                             WCDMA                   GSM

                       (1X- 256Kbits/s                   2.4 Mbits/sec          (GPRS – 40Kbits/s

                     EVDO-2.4 Mbits/s)                          2005            EDGE-70Kbits/s)

                     QCOM – 5% royalties               Nokia, Eric, Siemens,    Nokia, Ericsson,
                                                       QCOM- 5% royalties.      Siemens etc.

Chips &             QCOM – 95%, MOT,                  TI, Nokia, QCOM, LSI,    Nokia, Eric,
Software Stack      LSI, Samsung etc.                 Samsung etc.             Siemens etc.

Phone               Samsung, LG, Sanyo,               Samsung, LG, Nokia,      Nokia, Ericsson,
                    Sony-Eric, Motorola.              Sony-Eric, MOT etc.      Motorola etc.

                    LU, NT, Eric etc.                 LU, NT, Eric, Nokia,     Nokia, Eric, Siemens,
                                                      Siemens, Alcatel etc.    Alcatel, Motorola.

Service              Verizon, Sprint PCS,            Some parts of Europe      Cingular, T-Mobile,
Providers            Nextel, South Korea                                       ATT, Europe etc.

                                        China, India, Japan,
                                        South America etc.

 December 8, 2003                                                                                      7
    Qualcomm`s current business
QCOM CDMA                          Market   TOTAL market          CDMA2000            WCDMA
Technologies                       share

                                                                       √               ?
Revenues (52% of total   $1.5B     12.5%    $12B

Operating Margin         $500MM
(28%)                                         -Qcom - 95% of        -Nokia/Ericsson
                                              the market            have an
QCOM Technology
                                              -Scale (partnered     advantage
Licensing                                     with IBM)

                                                                       √              √
Revenues (34% of total   $1B

Operating Margin         $900 MM
                                               -5% royalties –     -There are more
                                               guaranteed          patent holders.
                                                                   How will they be
       * 2002 Annual Report

      December 8, 2003                                                                8
WCDMA Forecast

December 8, 2003   9
    Pros and Cons supporting WCDMA

   WCDMA will be the only technology accepted in Europe (license)

   Upside - Royalty revenues from WCDMA up to $10 Billion

   Early adoption of WCDMA implies early increases in royalty streams


   QCOM less likely to be a major player in the chip market – cannibalize existing
    CDMA 2000 chip sales growth
   Potential adopters of CDMA2000 will adopt a wait and see approach.
   High uncertainty regarding demand (see previous slide)

    December 8, 2003                                                         10
    Qualcomm Strategy in WCDMA
Qualcomm is assisting in the early development and adoption of WCDMA

   This will cost Qualcomm significant dollars in R&D, specifically in optimizing
    WCDMA systems.

   Partnering with a major chip manufacturer to achieve scale.

Hedging the bets

   Qualcomm is also rigorously pushing CDMA2000, and also its solution of
    GSM/1x to convert existing non-European GSM providers to CDMA2000

    December 8, 2003                                                          11
Wireless Convergence
                                  Cellular                         Laptop
                                    (3G)                    WI-FI (802.11/.15)
        Frequency           Exclusive                    Shared;

        Coverage            Excellent Coverage;          Growing Coverage;
                            Mobility                     No Mobility

        Manufacturers       Cellular Manufacturers       D-Link, Cisco, Intel

        Service Providers   Cellular Service Providers   Airports, McDonalds,
                                                         Individuals? Etc.

        Services            Voice, 3G Data               Data,
                                                         Voice over IP

        Costs               Service charge to end user   Free to end user,
                                                         Service provider pays ISP

December 8, 2003                                                                     12
      Wireless Data User Segment Analysis
                                                         Wireless Access

                             Corporate Access     Commercial Services       Communication

Wireless LAN √                High              Medium                     Low
Mobile Service Providers X

Wireless LAN X                Low               High                       Medium
Mobile Service Providers √

Wireless LAN X                Medium            High                       Medium
Mobile Service Providers √

Wireless LAN ?                Low               Medium                     High
Mobile Service Providers ?

        December 8, 2003                                                                13
Qualcomm WI-FI Strategy
Qualcomm may incorporate WI-FI into its chips.

Reasons :

• WI-FI can never directly compete with 3G cellular because
  – Low Coverage
  – No Mobility
  – Less security
• WI-FI can add the following benefits to Qualcomm’s chips
  – Cheaper last mile solution for service provider
  – Higher data rates without mobility

• Anything that grows the demand for data services is good.

December 8, 2003                                              14
The Wireless Data Revolution

Wireless Data development phases:
1. Person to Person
2. Person to Machine
3. Machine to Machine

Cellular Data Strengths:
1. Mobile
2. DSL like Data rate

Cellular Data Weaknesses:
1. Input/Output Constraints
2. Lack of the “Killer Application”

 December 8, 2003                     15

   The wireless industry is a very systemic industry, composed of various other
    systemic chains within chains.

   However, it is in everyone’s interest to grow consumer demand for wireless,
    specially wireless data, and this is what in the end drives the overall strategy of
    all the wireless companies, cellular and non-cellular.

   The upcoming wireless data boom shall create great opportunities for the
    prepared entrepreneur.

     December 8, 2003                                                           16

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