Qualcomm to Spin Off Chip Business

BOSTON (07/25/2000) - Qualcomm Inc. said Tuesday that it will spin off its integrated circuits and system software business and put its focus on developing CDMA (code division multiple access) technology and the meshing of wireless data applications and Internet access.

If Qualcomm's board of directors and federal regulators approve, Qualcomm will be able spin off the new company, known as Qualcomm Spinco Inc., by August 2001, a company statement said. Spinco will seek to develop and deliver wireless communications integrated circuits and system software for handsets and infrastructure manufactures.

Qualcomm will provide a portion of its patents to Spinco, but it will not compromise its existing licensing and royalty business, the company statement said. Spinco will use its patents to gain a foothold in the GSM (global system for mobile communications) and other technologies by negotiating licensing deals.

Qualcomm will still hold more than 1,000 patents and patent applications in the U.S. that are necessary for existing or proposed CDMA technology. Qualcomm is a proponent of WCDMA (wideband code division multiple access) and cdma2000, which are third generation (3G) models for CDMA.

Qualcomm recently said it will have cdma2000 deployed commercially by the fourth quarter of the year, company spokeswoman Christine Trimble said. WCDMA chipsets and software will be made available sometime in 2001, she said.

Although the company supports all modes, Qualcomm said it believes cdma2000 provides a more efficient, lower risk and lower cost path to all 3G services.

Spinco's executive team will include Qualcomm President Irwin Jacobs, who will be chairman of the new company; Richard Sulpizio, chief executive officer; and Don Schrock, president and chief operating officer. Spinco will gain Qualcomm's integrated circuits and system software business, 1xEV (HDR) product development, position location product development (SnapTrack) and research and development centers in Boulder, Colorado, the U.K. and Israel.

Shares of the new company will be distributed to Qualcomm stockholders in the form of a tax-free dividend. Lehman Brothers and Goldman, Sachs & Co. will be the lead managers of the new company's initial public offering (IPO).

Shares of Qualcomm were up US$2.94, or 4.62 percent a share, to US$66.56 in early morning trading.

Qualcomm, in San Diego, California, can be reached at +1-619-587-1121 or at http://www.qualcomm.com/.

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