Qualcomm says no royalty cut, offers to help makers

NEW DELHI: India is set to see the advent of CDMA handset manufacturing, as Qualcomm on Wednesday said that the company would go all out to help domestic manufacturing.

“The company has already identified a vendor for the project and is also scouting for a few more partners,” Qualcomm CEO Paul Jacobs said.

The Qualcomm chief also categorically ruled out any cut in royalties but said that the company was open to enhancing its research and development capabilities in India similar to the models it followed in other markets such as South Korea and China.

(In Korea, about 20% of the royalty payments received by Qualcomm goes towards funding the government-owned research institute ETRI.) “We don’t have a 7% royalty in India as reported — the rates are below 5%. So on a $40 handset, the royalty is just $2 — if we were to cut that royalty, we have just half a dollar left,” Mr Jacobs said here.

Justifying the royalty on CDMA handsets, Mr Jacobs said that the company spent this money on research and development and improving the functionality of handsets. “We are hopeful that in India we can replicate what is happening in other markets such as China and Korea,” he added.

Later in the day, Mr Jacobs also met the minister for communications and IT, Dayanidhi Maran. Sources said that Mr Maran, during the meet with Mr Jacobs had recommended that Qualcomm remove all “bottlenecks”, which hinder telephony growth, while adding that a reduction in royalty would help bring down prices further.

Mr Maran is also understood to have told the Qualcomm chief that India’s spectrum policy was unbiased. Highlighting the company’s plans to enhance its R&D centre in Bangalore, Mr Jacobs said: “We have about 400 people currently and will rapidly increase our headcount there.

Currently, this centre contributes to technological development bits and pieces, but soon it will be undertaking full scale design. People and creativity are very high in India.” Qualcomm also claimed that the price difference between GSM and CDMA handsets was only $4, and this could not be a reason that any CDMA operator shift to GSM.

According to Jeffrey K Belk, senior VP (marketing), Qualcomm, 63% of all CDMA handsets are below $55 and 90% are below $75.