Qualcomm upbeat on smartphone market

TAIPEI (Reuters) - Qualcomm is seeing strong demand for higher-end smartphones despite a weak economy and expects promising growth from the issue of 3G licenses in China, a senior executive at the world's largest maker of cell phone chips said.

Some chipmakers and PC vendors are pinning hopes on fast-growing sales of feature-jammed smartphones to help insulate them from the worst effects of the global economic slowdown, which is sapping demand for personal computers and other hi-tech gadgets.

"Consumer demand for higher-end smartphones remains strong as the demand for wireless Internet, multimedia, and value-added services continues to grow," Jing Wang, a Qualcomm executive vice president, said on Friday in an e-mailed response to Reuters' questions on the outlook for the cell phone and cell phone-chip markets.

"While inventories have contracted, global 3G adoption is continuing to grow as subscribers migrate from second-generation to third-generation networks and manufacturers are shipping more 3G devices this year than last year," the executive said.

Credit Suisse said in a report in February the global smartphone market will grow to 204 million units in 2011 from 141 million units in 2008.

Wang, who is in-charge of Qualcomm's business in the Asia Pacific, Middle East and Africa regions, said Qualcomm will continue to support the growth of Chinese companies in the development of 3G CDMA networks, devices, and applications.

"The issuance of 3G licenses in China is a significant development that presents an exciting opportunity for growth," he said.

The number of CDMA subscribers (including CDMA2000, WCDMA and TD-SCDMA) in China is expected to increase to 211 million in 2013 from 30 million in 2008, he said, citing data from a research house.

China's government has worked hard to develop its homegrown TD-SCDMA 3G standard to promote its own industries and avoid hefty royalties demanded by companies behind the world's most widely accepted 3G standards, WCDMA and CDMA 2000.

Qualcomm currently has license agreements with more than 30 companies based in China, including 10 new agreements executed over the past 12 months, Wang said, without identifying them.

Qualcomm is a major client of TSMC, the world's biggest contract chipmaker, and its chips help power smartphones sold by Taiwan's HTC Corp, which expects sales in China to double this year.

When asked if Qualcomm will place more new orders to TSMC later this year, Wang said: "Any improvement in market conditions that would drive increased volumes of Qualcomm's chipset shipments would also be expected to drive increased volume for our suppliers."

(US$1=T$33.8)

(Reporting by Baker Li, Editing by Ken Wills and Muralikumar Anantharaman)