Among the three most prospective candidates for the 4th generation mobile communication, LTE, Mobile WiMAX and UMB, it is Long Term Evolution (LTE) that has built the strongest camp of supporters. In comparison, Mobile WiMAX led by Intel and Samsung Electronics, and Qualcomm’s UMB look rather insignificant.
A number of mobile carriers in Korea and abroad already chose LTE and preparations are under way. It is likely that many more will join them. Manufacturers of telecom equipment or handsets have made up their mind to follow the big trend.
Even though UMB has little chance, Qualcomm is not pessimistic about the expansion of LTE, because the chip maker owns OFDM, the core technology for LTE, which means the further LTE grows, the more Qualcomm earns in royalties.
Qualcomm which held less than 20% of the 2G market with GSM overpowering CDMA is earning a fortune in the bigger 3G market thanks to the victory of WCDMA. The US-based company is leaving competitors far behind in technology and the gap is likely to become wider. EMP(Ericsson Mobile Platform), STMicro and NXP turned to M&A to join forces against Qualcomm, but the US chip maker is too strong to overcome. Other companies such as Infineon are also suffering a gradual decline of market share.
Then, what does WiBro mean to Qualcomm? It seems the best scenario for Qualcomm is WiBro creates a niche at the right moment.
In a recent report, Samsung Securities says, "Qualcomm is not demanding high rates of royalty in the beginning stage of 3G, but will probably raise the rates gradually from about 2012 when 3G reaches 50% of the overall telecom market. However, it is more likely that Qualcomm prefers the overall market becoming bigger to pushing for extremely high royalty rates. The latter might open the way for new services using disruptive technologies such as WiFi and WiBro that have nothing to do with Qualcomm, according to the report.
For Qualcomm, WiBro is one of possible choices, but is something better being left as a market niche.
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