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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.