QUALCOMM Licensing/IPR Overview

June 21, 2006

2006

Licensing/IPR
Overview

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QUALCOMM Licensing/IPR Overview
June 21, 2006

Safe Harbor
Before we proceed with our presentation, we would like to point out that the
following discussion will contain forward-looking statements from industry
consultants, QUALCOMM, and others regarding potential market size, market
shares, and other factors which inherently involve risks and uncertainties.
These and other risks and uncertainties relating to QUALCOMM’s business are
outlined in detail in our most recent 10-Q and 10-K forms filed with the
Securities and Exchange Commission.
Please consult those documents for a more complete understanding of these
risks and uncertainties.
This presentation may include a discussion of "non-GAAP financial measures"
as that term is defined in Regulation G. The most directly comparable GAAP
financial measures and information reconciling these non-GAAP financial
measures to the company's financial results prepared in accordance with GAAP
have been posted on the company's Investor Relations web site at
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http://www.qualcomm.com/IR/ 2
QUALCOMM Licensing/IPR Overview
June 21, 2006

QUALCOMM Business Model:

Technology and Value Chain Enabler

Focused on growing and

adding value to the industry
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QUALCOMM Licensing/IPR Overview
June 21, 2006

Aggressive Investment in a Complete Technology Roadmap

Cumulative R&D Expenditures More Than $5.5B to Date $1.01B

Standard royalty rate has not changed during this time

$720M
HSUPA, MBMS,
QUALCOMM Yearly R&D Expenditures Tri band
WCDMA- RF,
Lower Cost
$523M HSDPA,
HSDPA
$452M EDGE OFDMA
$415M MediaFLO, 802.20,
OFDM multicast FLASH-OFDM,
$340M
(FLO & EV-DO 802.11n,
EV-DO Rev. A Platinum), Scaleable
Integrated (VoIP, QoS, etc) iWAN including Bandwidth -
1xEV-DO multimedia RF CMOS In-Cabin, EV-DO,
GSM/GPRS (video, audio, QChat,
WCDMA UI / Trigenix, OMA DRM v2,
JAVA CMX, storage, CDMA450 MEMs / Iridigm,
CDMA2000 1X Bluetooth 3D, etc), Integrated MDDI,
RF CMOS
gpsOne (A-GPS) R-UIM World phone, multimedia, HSDPA
QChat,
BREW WCDMA GSM/GPRS World phone CDMA450 EDGE
radioOne (ZIF) CDMA2000 1X 1xEV-DO GSM/GPRS Integrated MediaFLO USA,
HDR gpsOne (A-GPS) JAVA… 1xEV-DO multimedia, OFDM
Tri-mode BREW Bluetooth JAVA World phone multicast (FLO
cdmaOne… radioOne… R-UIM… Bluetooth… GSM/GPRS… & EV-DO…

2000 2001 2002 2003 2004 2005

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Technologies listed for each year are based on initial press releases. R&D typically began substantially earlier. 4
QUALCOMM Licensing/IPR Overview
June 21, 2006

Additional Industry Advancements: Acquisitions & Expenditures

SnapTrack Position location & E-911 services $1.0B
Enables low cost position location services from mobile devices

Flarion OFDMA $805M

Provides greater differentiation, enables hybrid CDMA/OFDMA path

MediaFLO USA* Nationwide mobile multicast network $800M

Lower cost video and multimedia content to large audiences

Iridigm Affordable, low-power display screens $186M

Better user experience, extended battery life

Elata Unified multimedia content delivery platform $57M

Standardized user experience, lower cost, faster introduction of new content

Berkana Wireless RF CMOS integrated circuits $56M

Increased integration, lower cost, faster time-to-market

Trigenix User Interface customization $36M

Lower cost, faster time-to-market

TechSoft Application software for 3G devices $35M**

Reduce time to market and lower development costs for 3G devices

Spike 90nm wafer technology $20M

Lower cost, reduced geometry allows for smaller form factors
*Expected to require approximately $800M in funding over the next 4 to 5 years,
PAGE 5 some of which may be provided by third parties (as of November 2004 guidance) .
** Combined investment with TechFaith Wireless Communication Technology Limited (TechFaith) .
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QUALCOMM Licensing/IPR Overview
June 21, 2006

QUALCOMM’s Unique Patent Position Dec ’05 Cum. Foreign Patents

Patent Portfolio is a Strong Asset Value ~22K

~6K
Cumulative U.S. Patents (Issued Patents & Filed Applications)
(Excludes non-U.S. filed applications and granted patents) Granted Granted and Applied

4,500
4,000 Dec-05
~1,600 Issued
3,500 ~4,300 Total
3,000
2,500
2,000 Jan-99
250 Issued
1,500 ~700 Total
1,000
500
0
Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Dec'05

Issued Total (Issued and Applied)

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QUALCOMM Licensing/IPR Overview
June 21, 2006

The Purpose of Patent Protection

• According to The United States Constitution:

• Art. 1, Sec. 8, Cl. 8

•The Congress shall have the Power…To promote the

Progress of Science and useful Arts, by securing for
limited Times to Authors and Inventors the exclusive
Right to their Respective Writings and Discoveries.

• To allow an inventor to obtain a fair return on its

investment

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QUALCOMM Licensing/IPR Overview
June 21, 2006

What is a Patent?

• Important to understand: A patent confers upon an inventor a

right to exclude others from making, using, offering for sale,
selling or importing inventions covered by the patent

• A patent is not a right to practice a claimed invention (that is, to

practice your own patent may require using others’ patents)

• Alternatives available to the patent holder:

• Enforce its rights to exclude others from practicing its invention
• Practiced only by the inventor

• Choose to license
• License narrowly
• License broadly
• Commitments to license

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QUALCOMM Licensing/IPR Overview
June 21, 2006

What is a License?

• A license is fundamentally a promise by the licensor not to sue

the licensee for infringement of the licensed patents

• Key Terms of a License Agreement

• License grant
• Exclusive versus non-exclusive
• Worldwide versus regional
• Licensed products
• Licensed patents
• Field of use

• Up-front license fee/running royalties

• Cross License

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QUALCOMM Licensing/IPR Overview
June 21, 2006

What are Pass Through Rights?

• The ability of a licensee to pass through to its customers rights
to a third party’s patents such that the customer does not need
to take a separate license from the third party for such patents

• Pass Through Rights May be Granted in Several Ways

• Standard make, use, sell, etc. license
• Right to sublicense
• Covenant not to assert
License
Company agreement Company
• Common Practice A B
Sales of
product
passes
through rights

Customer Customer Customer

1 2 3

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QUALCOMM Licensing/IPR Overview
June 21, 2006

What is an Essential Patent?

• A patent that must be infringed in order to implement a standard

(i.e., the only way to comply with the standard is to use the
patent)

• Not all essential patents are created equal

• Fundamental patents
• Implementation patents
• Optional features/services

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QUALCOMM Licensing/IPR Overview
June 21, 2006

How are Licenses Negotiated?

• Bi-lateral Negotiations Between Potential Licensors/Licensees

• Licensee’s need for a license to the licensor’s patents
• Licensor’s need for a license to the licensee’s patents (typically referred to as
a cross-license)
• Market for the patented technologies
• Allows the parties to negotiate an agreement that is tailored to the unique
needs of each party

• Potential Outcomes of License Negotiations:

• Parties enter into an agreement
• Licensee contests the need for a license, validity of the patents and/or terms
requested by the licensor
• Licensor seeks to enforce its rights under the patents

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QUALCOMM Licensing/IPR Overview
June 21, 2006

Why QUALCOMM Licenses

• Focus QUALCOMM
• As a technology developer and enabler

• Not an OEM or supplier of end-user products

• Speed adoption of QUALCOMM technologies

– Work with partners to create and enhance solutions
and ensure a variety of competitive products are
available to meet customer needs
– Grow wireless value chain in conjunction with
technology, manufacturing, sales and service partners

• Generate revenue
– Return on R&D investment
– Invest in technology
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QUALCOMM Licensing/IPR Overview
June 21, 2006

Whom Do We License?

• Primarily equipment manufacturers

• Infrastructure, subscriber, test equipment and
ASICs

• Companies both large and small –

established and start-ups

• Regional and international in scope

• Private and public

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QUALCOMM Licensing/IPR Overview
June 21, 2006

More Than 130 License Agreements

Examples of our licensees:

NOKIA

Complete list of licensees available on the Internet:

http://www.qualcomm.com/technology/licensing.html
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QUALCOMM Licensing/IPR Overview
June 21, 2006

QUALCOMM Licenses Over 130 Vendors

QUALCOMM promotes competition through a large base of licensees
Subscriber Related Products: Pantech Co., Ltd. Huawei Technologies Co., Ltd.
4G Systems GmbH Putian Capital Group Kisan Telecom Co., Ltd.
Aiji Systems Co., Ltd. Research In Motion Limited LG Electronics, Inc.
AL Communications Co., Ltd. Rose Telecom Co., Ltd. Lucent Technologies Inc.
ALBAHITH Samsung Electronics Co. Mitsubishi Electric Corporation
Alps Electric Co., Ltd. Sanyo Electric Co., Ltd. Motorola, Inc.
Amoi Mobile Co., Ltd. Seiko Instruments Inc. NEC Corporation
Arasor International Group Holding Limited Company Sendum Wireless Corporation Netgenetech Co., Ltd.
Axesstel, Inc. Shanghai Huntel Technologies Co., Ltd. NOKIA Corporation
Axio Wireless, Inc. SHARP Corporation Nortel Networks Limited
Bellwave, Inc. Siemens Aktiengesellschaft Panasonic Mobile Communications Co., Ltd.
BenQ Corporation Sierra Wireless, Inc. Putian Capital Group
Casio Computer Co., Ltd. Sim Technology Group (BVI) Limited Samsung Electronics Co.
CEC Telecom Co., Ltd. SK Telecom Co., Ltd. Siemens Aktiengesellschaft
Compal Communications, Inc. SOMA Networks, Inc. SOMA Networks, Inc.
Creative Mobile Technology (CMOTECH) Co., Ltd. Sony Corporation Telefonaktiebolaget LM Ericsson
Crest Glory Corporation Sungil Telecom Co., Ltd. Tenosys, Inc.
Dalian Daxian Group Co., Ltd. Synertek, Inc. United Computer and Telecommunication, Inc. ^
Dalian Huanyu Mobile Technological Co., Ltd. - Sewon Telecom Ltd. Unity Wireless Corporation
Datang Telecom Technology Co., Ltd. - ZAKANG, Inc. UTStarcom, Inc.
Denso Corporation TCL Corporation Vanu, Inc.
Eastern Communications Co., Ltd. Techfaith Wireless Communication Technology Limited ZTE Corporation
Egyptian Telephone Company Telefonaktiebolaget LM Ericsson
ERON Technologies Corporation Teleion Wireless, Inc. Component Related Products:
ETRONICS Corporation Telular Corporation Agere Systems Inc.
Flextronics International Ltd. Toshiba Corporation EoNex Technologies, Inc.
Foxconn International Holdings Limited Ubiquam Co., Ltd Fujitsu Limited
Fujitsu Limited Ubistar Co., Ltd. Icera Inc.
Garmin Corporation Uniden Corporation Infineon Technologies AG
Glenayre Electronics, Inc. United Computer & Telecommunication, Inc. Koninklijke Philips Electronics N.V.
Guangzhou Jinpeng Group Co., Ltd. UTStarcom, Inc. Lucent Technologies Inc.
Haier Group Company Vitelcom Mobile Technology S.A. Motorola, Inc.
High Tech Computer Corporation VK Corporation NEC Corporation
Hisense Group Co., Ltd. Wavecom S.A. Renesas Technology Corp.
Hitachi, Ltd. Westech Korea, Inc. Texas Instruments Incorporated
Huawei Technologies Co., Ltd. Wherify Wireless, Inc. VIA Telecom, Inc.
Inventec Appliances Corp. Yiso Wireless Co., Ltd.
Kenwood Corporation Yulong Computer Communication Scientific (Shenzhen) Co., Ltd. Test Related Products:
Koninklijke Philips Electronics N.V. ZTE Corporation Advantest Corporation
Konka Group Co., Ltd. Aeroflex Cambridge Limited
KTF Technologies Inc. Infrastructure Related Products: Agilent Technologies, Inc.
Kyocera Corporation Airvana, Inc. Ando Electric Co., Ltd.
Langchao Group Co., Ltd. AirWalk Communications, Inc. Anritsu Corporation
Lenovo Mobile Communications Technology Ltd. Alcatel SA Comarco Wireless Technologies, Inc.
LG Electronics, Inc. Alps Electric Co., Ltd. Dyaptive Systems, Inc.
Lucent Technologies Inc. Alvarion Mobile Inc Hewlett-Packard Company
Matsushita Electronic Components Co., Ltd. Andrew Corporation IFR Systems, Inc.
Maxon Telecom Co., Ltd. Axio Wireless, Inc. Japan Radio Co., Ltd.
Mitsubishi Electric Corporation Cisco Systems, Inc. Motorola, Inc.
Mobile System Technologies, Inc. Contela, Inc. Panasonic Mobile Communications Co., Ltd.
Motorola, Inc. Dailan Huanyu Mobile Technological Co., Ltd. Racal Instruments Wireless Solutions Limited.
NEC Corporation Datang Telecom Technology Co., Ltd. Rohde & Schwarz GmbH & Co. KG
Ningbo Bird Co., Ltd. Eastern Communications Co., Ltd. Rotadata Limited
NOKIA Corporation EC Telecom Inc. ^ Spirent Communications, Inc.
Novatel Wireless Inc. EMS Technologies, Inc. ^ Tektronix, Inc.
Option NV S.A. Fujitsu Limited Telefonaktiebolaget LM Ericsson
palmOne, Inc. Great Dragon Information Technology Corporation Ltd. Willtek Communications GmbH
Panasonic Mobile Communications Co., Ltd. Guangzhou Jinpeng Group Co., Ltd.
Pantech & Curitel Communications, Inc. Hitachi, Ltd.
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QUALCOMM Licensing/IPR Overview
June 21, 2006

Five Types of Standard License Agreements

Subscriber
Modem Card

Infrastructure

ASIC
BTS
BSC

Test Equipment

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QUALCOMM Licensing/IPR Overview
June 21, 2006

QUALCOMM Lowers Overall IP Cost

• No additional QUALCOMM royalty rate above the

QUALCOMM standard WCDMA / CDMA2000 royalty
rate
– Licensed portfolio has grown substantially through
development and acquisitions while standard royalty
rate has not increased
– In 2005 alone, QUALCOMM spent over $1B on R&D
for technologies made widely available to the industry
– Multi-mode products (e.g., OFDMA and/or GSM with
3G CDMA)
– Subject to other standard terms and conditions

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QUALCOMM Licensing/IPR Overview
June 21, 2006

QUALCOMM Lowers Overall IP Cost – Enables Competition

Licensed Portfolio Has Grown Substantially While Average Royalty per Handset
($) Has Declined Significantly

~4.3K

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Cum US Patents Filed Royalty $ per Unit

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QUALCOMM Licensing/IPR Overview
June 21, 2006

QUALCOMM Lowers Overall IP Cost

• Reduces royalty stacking

– QUALCOMM has proactively acquired licenses
from its licensees and others to manufacture and
sell components
– Over 100 companies have provided licenses to
QUALCOMM to pass through a significant
number of 3rd party intellectual property rights to
our chipset customers
– Reduces royalty stacking for QUALCOMM
component customers

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QUALCOMM Licensing/IPR Overview
June 21, 2006

GSM Has Flourished While Employing a Royalty Structure

• GSM Handset royalties range from 3

percent to 29 percent
• Vendors with substantial IPR cross-license

• Vendors with little or no IPR negotiate with

individual companies

“Royalty fees make up to 29% of the costs of

GSM handsets”
Director of the European public Telecommunications
Network Operators' association (ETNO)
Source: Eindhoven Center for Innovation Studies (ECIS) white paper
dated Sept 2000

"This year foreign firms are demanding royalties

for GSM licensing and the amount accounts for 15
percent of the product price," a source from
Samsung Electronics said.
Source: An executive from Samsung Electronics, reported in the
Korean Times, June 29, 2000 Source: ITSUG 1998
Cited in 3GMobile November 23, 2005
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 QUALCOMM Licensing/IPR Overview
June 21, 2006

Increasing Handset Competition in 3G

(Market Share)
100%
Other Siemens Sanyo Samsung
Other Siemens
90% Samsung
Samsung Samsung Panasonic
80%
Other Other
70% 8 Other
Nokia
36 Other
60% Nokia

50% Nokia
Nokia Nokia
Nokia
40%
Motorola
NEC
30%
Motorola
Motorola
20% Motorola LG Motorola
Motorola
10% Ericsson / SEMC
Ericsson / SEMC LG
Ericsson / SEMC Kyocera
0%
AMPS 1999 TDMA 2000 GSM 2001 GSM 2005 CDMA2000 2005 WCDMA 2005

• Large number of handset OEMs creates a competitive environment for 3G

Note: Vendors with a market share under 5% have been placed in the “Other” category
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Sources: Analog & TDMA – Gartner Group, 2000; CDMA, GSM & WCDMA – Strategy Analytics, 2006 22
QUALCOMM Licensing/IPR Overview
June 21, 2006

Lowering the Cost of CDMA2000 Devices

CDMA2000 = Highest Capacity Networks, Less Infrastructure Cost

Today
Sub $50 CDMA phones
by three manufacturers
$120
Lowest end CDMA handsets in
$98 India ~$40
$100 $90
$78 $77
$80 $71

$60 $50 $54

$48
$40

$20

$0
2002 2003 2004 2005

Lowest 10% Lowest end

Note: CDMA Devices Sold per Calendar Year; Lowest end phones sold in quantities over 150,000 units with on-going shipments
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Source: QUALCOMM Incorporated 23
QUALCOMM Licensing/IPR Overview
June 21, 2006

India CDMA2000 Sub $50 Volume Outperforms GSM in March ’06

India Low-Cost (Sub $50) Device Volume and ASP
1,600 $60

1,400
$50

1,200
Device Volume (000)

$40
1,000

ASP ($US)
800 $30

600
$20

400

$10
200

0 $0
Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06

GSM Devices CDMA Devices GSM ASP CDMA ASP

Entry-level ASP differential is less than $5 USD

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Source: Yankee Group, 2006 24
QUALCOMM Licensing/IPR Overview
June 21, 2006

Lowering the Cost of WCDMA (UMTS) Handsets

WCDMA ASP
$412
$372 $342
10%
$500 dec. 8% d
ec.
$436
$412 $407
$400 $367
Jun'05 Sep'05 Dec'05
$341
$311
$290 $290 $295
$300 $287
$272 $270 $270
$254
$228
$217
$197
$200
$141

$100
2003Q4 2004Q1 2004Q2 2004Q3 2004Q4 2005Q1 2005Q2 2005Q3 2005Q4

Lowest 10% Lowest end

Note: WCDMA Phones Sold per Calendar Quarter; lowest end sold in quantities of approx 50,000 units or higher
Note: Data derived from licensee reports. Does not include
PAGEmodules.
25 Source: QUALCOMM Incorporated
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QUALCOMM Licensing/IPR Overview
June 21, 2006

Summary

• QUALCOMM’s broad licensing program promotes vibrant

competition within the industry

• QUALCOMM has not increased its standard royalty rate while its
patent portfolio has grown substantially

• Licensing model reduces royalty stacking

• QUALCOMM is aggressively investing to deliver a compelling

technology roadmap in WCDMA & CDMA2000

• ~$1B investment in R&D in 2005 was focused on air interface

technology, chipset development / integration and software
platform capabilities and we continue to focus on these areas in
2006

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QUALCOMM Licensing/IPR Overview
June 21, 2006

Q&A Session

• Mike Hartogs: VP & Division Counsel, QUALCOMM Technology

Licensing

• Jeffrey K. Belk: Sr. VP, Marketing

• Kanwalinder Singh: President, QUALCOMM India and SAARC

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QUALCOMM Licensing/IPR Overview
June 21, 2006

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