Qualcomm looks to sell handset business

Qualcomm Inc. developer of the popular

cell-phone technology, said it was in talks to sell its phone-making

business. Increasing competition, falling profit margins and drop in

handset prices have forced Qualcomm to consider selling its handset

business, suggesting the wireless industry is facing the same pricing

pressures as the personal computer market.

Qualcomm makes only about 10 million mobile phones per year, compared

with roughly 50 million for some larger vendors, according to analysts.

Accordingly the company cannot keep its costs in line with larger handset

makers such as Nokia, Ericsson, and Korean vendors including Samsung,

Hyundai, and Hitachi. "There's a lot of competition coming in from

South Korea and East Asian nations which is driving costs down," said

Strategy Analytics a wireless industry analyst Kelly Quinn.

Qualcomm's decision to explore its options is intended to focus the

company on more profitable businesses such as selling chipsets for its

code division multiple access (CDMA) mobile phone technology, which reaps

rewards through licensing arrangements. The company makes money by selling

mobile phone chips to other phone makers and by licensing its CDMA

technology to other chipmakers. Qualcomm already has sold its wireless

infrastructure business to Ericsson, and if the company sells its handset

business, the move could pay large dividends, analysts said.