Qualcomm Sees Spike in its Future

Qualcomm is in talks to acquire a semiconductor
design firm to help satisfy demand for its third-generation CDMA wireless devices, the
company said Thursday.

The wireless giant will pay about $19 million in cash for Spike
Technologies, of Milpitas, Calif., and its affiliated companies. Qualcomm
will combine strategies with Spike and incorporate the startup’s
design, sales and technical support as well.

With a design center in Bangalore, India, Spike specializes in physical
design for deep sub-micron process technologies, circuit development, and
design and verification engineering for pre-silicon design debug and
analysis.

The technology is expected to aid Qualcomm’s CDMA division (QCT segment),
which continuously heads the list of the Fabless Semiconductor Association’s
top revenue producer of all fabless companies. According to that trade group,
Qualcomm’s revenues exceed more than $500 million nearly every quarter.
Still, company execs say the Spike purchase will keep it competitive with
rivals like Nokia , Motorola , NTT DoCoMo
and Ericsson .

“The acquisition of Spike Technologies underscores Qualcomm’s drive to
expand the markets and engineering resources for our products worldwide and
to deliver a broad series of chipset platforms for the wireless industry,”
Sanjay K. Jha, executive vice president and president of Qualcomm CDMA
Technologies, said in a statement.

The purchase is also expected to increase sales of Qualcomm’s 3G handsets
and related technologies. Based on the Wideband Code-Division Multiple
Access standard, 3G features transfer speeds that support
two-way video telephony and other bandwidth-consuming applications. The
technology is popular in Japan where the 3G market will reach 69 million
subscribers by 2007, according to market analyst firm IDC.

To date, it’s been slow to grow in the United States.

San Diego-based Qualcomm has been making trying to buck that trend
through various acquisitions and partnerships. Late last week, Qualcomm said
it was licensing the Microsoft Windows Media Player
codec to make it easier to play audio and video on its handsets.

Earlier this month, Qualcomm said it would pay $170 million for Iridigm
Display, which makes screen display technology for wireless devices,
cameras, MP3 players, camcorders, GPS receivers and game consoles.

And even before the Spike acquisition announcement, Qualcomm has been
seeing improvements on the horizon. Last month, the company raised quarterly
financial estimates and now estimates that it will have shipped between 38
million to 39 million cell phone chips as September’s numbers are tabulated.

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