The Korea Herald : Qualcomm unveils Korean investment plans

The Korea Herald : The Nation’s No.1 English Newspaper.

Qualcomm, bracing for a legal battle with Korea’s antitrust watchdog, said yesterday it will invest $4 million in a Korean chip venture firm and build an R&D center here.

Paul E. Jacobs, chief executive officer of the world’s top supplier of mobile phone chips, announced the plans in a news conference in Seoul.

He said that Qualcomm would appeal the Korean Fair Trade Commission’s decision to levy 260 billion won ($222 million) in fines on the company.

“(As to antitrust charges), we do disagree, and that legal process will continue. What we really want to focus on though is … the relationship of Qualcomm to Korean manufacturers, to institutions and academia,” Jacobs said.

The Sandiego-based envisioned R&D center in Korea, which would be its second overseas R&D center after one in China, will initially focus on multimedia topics, and work with Korean companies, government labs and academic institutions, Jacobs said.

“Multimedia is an area of really good expertise here in Korea,” he said.

“We all know that the phone is changed. It has really become something for computing, entertainment, productivity, as well as communications.”

Mattew S. Grob, vice president of Qualcomm Corporate R&D, said, “We will consider projects in multimedia, semiconductors, display technologies, and sensors beyond the original modem performance, but focus particularly as an initial area on multimedia topics, which are very strong in this region.”

The company did not give figures on its investments or employment for the R&D center, saying it will depend on the number of projects.

“We don’t have a fixed number of people or investments. It will be driven actually by the number of projects that we are bringing out,” Jacobs said.

“It’s very easy to come in and make flash announcements, ‘we are going to pull all this money and all this people,’ and then what often happens with those flashy announcements is they evaporate.”

He also announced the company’s long-anticipated investment in the Korean audio and multimedia chip maker, Pulsus Technologies. This marks its first investment in a local company. Qualcomm is looking at other companies for more investments, Paul and other executives said.

“We have already started the search and selection process for the next few Korean investments and we hope to expand our investment program in these Korean companies in the future,” Nagraj Kashyap, vice president, Qualcomm Ventures, said at the news conference.

Qualcomm runs “Qualcomm ventures,” a venture capital arm dedicated to investing between $500,000 to $10 million in IT companies, each.

The U.S. company has maintained close ties with Korean handset makers since Korea became one of a few countries to adopt the mobile communications standard known as CDMA some 20 years ago.

Qualcomm holds core technologies for CDMA for which it receives royalties from firms making CDMA phones. Qualcomm also sells chips of CDMA phones with companies, and controls more than 96 percent of the global CDMA modem chip market, according to the Fair Trade Commission.

Korea is one of the key markets for the company, as the country uses CDMA technology and it is home to Samsung and LG, the world’s No. 2 and No. 3 handset makers, respectively.

Last year, Qualcomm was hit with antitrust charges by the Fair Trade Commission, which slapped its record-high fine of 260 billion won on the company. The FTC accused the dominant cell phone chip maker of stifling competition by charging higher royalties on companies that also use chips provided by Qualcomm’s rivals, and offering rebates to companies that buy chips from Qualcomm.

Japanese antitrust watchdog also leveled antirust charges against Qualcomm in September, while antitrust charges in the European Union were dropped in November.

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