Qualcomm, Gold sponsor of the 2009 Symbian Exchange and Exposition, today announced a new subsidiary called QuIC (Qualcomm Innovation Center, Inc) to focus on optimizing open source software such as Android, Symbian and Chrome to its wireless chipsets. Qualcomm settled its legal disputes with Nokia last year and earlier this year Nokia awarded a 3G / 3.5G design-win to Qualcomm. Qualcomm agreed to port Symbian operating system to its MSM7000 and 8000 series chips and Nokia's handsets based on this partnership are expected to debut in 2010.

We believe that Qualcomm will play an important role in Nokia's high-end smartphone portfolio in the coming years as Nokia continues with its multi-vendor strategy for baseband suppliers.  Nokia's previous custom ASIC approach, primarily using Texas Instruments (TI), is gradually reducing and Broadcom, ST-Ericsson and Qualcomm will ramp up at Nokia to compensate for this. We expect Nokia to use Qualcomm and ST-Ericsson in the high-end portfolio while Infineon and Broadcom are expected to play a role in the low-end to mid-range portfolio. It is worth noting that with the exception of Infineon, the remaining three are all fabless semiconductor companies. This is in line with Nokia's strategy to adopt standard off-the-shelf ASSP solutions instead of custom ASICs. Earlier Texas Instruments didn't have a 3G baseband design of its own and acted like a foundry for Nokia's in-house designs.

Currently Qualcomm has a relatively weak position in the smartphone market primarily because it did not support the Symbian OS. However, the company's recent settlement with Nokia, its SnapDragon processors and multiple Android and Windows Mobile design-wins could potentially make it competitive in the smartphone market. We believe that initiatives such as QuIC could contribute positive results in improving Qualcomm's smartphone position.

Sravan Kundojjala