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TI Challenges QUALCOMM to CDMA Duel

Texas Instruments threw down the gauntlet Wednesday saying it will "expand its presence" in the CDMA market.

At its annual analysts' meeting in Dallas, TI said it will begin offering CDMA2000 products to a broad base of customers beginning next quarter. The company also said it is on track to produce a single-chip cell phone, "with all of a cell phone's key functions integrated onto one chip" by the end of 2004.

"As functions are increasingly integrated, TI believes fewer companies possess the wireless expertise, system-on-chip integration skills, manufacturing know-how and advanced process technologies required to build tomorrow's cell phones," the company released in a statement.

The move is a direct blow to QUALCOMM , the company that owns most of the patents to the third-generation phone technology.

Also known as single carrier radio transmission technology (1xRTT) CDMA2000 is based on the Code Division Multiple Access (CDMA) platform and can provide ISDN-like speeds of up to 144 Kbps.

TI already makes a host of cell phone chips based on the more predominantly used GSM technology, but this is the first time that the chipmaker will go head-to-head with the San Diego-based wireless giant on its own turf. The two companies are under a CDMA licensing agreement until 2005.

Finland-based cell phone maker Nokia and Samsung Electronics have also announced their intention to make phones using their own CDMA chips.

"It's possible Nokia will be using Texas Instruments' chips for more fully featured advanced phones," Jane Zweig, the chief executive at consulting firm Shosteck Group told Reuters. "Nokia seems to be going after the low-end with what they're doing with their own chips."

TI says wireless is one of its fastest growing areas. The company said its revenue grew 7-times faster than the rest of the industry's handset units in 2002. The biggest factor in this content growth was higher shipments of products for 2.5G phones. More than 55 percent of TI's wireless revenue in the first quarter of 2003 came from 2.5G products.

The company has had its sights set on its own version of CDMA for sometime now. TI managed to buy Dot Wireless for $475 million back in June 2000. The San Diego startup headed by former QUALCOMM exec Rick Kornfeld was of great interest to TI because of its CDMA expertise.

And analysts say taking on a company that basically wrote the book on CDMA is not as risky as one might think.

"We don't know how TI's going to perform here ... but obviously ... another competitor, particularly one of TI's scale, is not a positive for QUALCOMM," Deutsche Bank Securities wireless equipment analyst Brian Modoff told Reuters.

And while TI did not release specific details about its CDMA plans, the company is expected to use the technology for its wireless handsets and basestations, broadband and digital consumer products.