December 8, Qualcomm´s Multi-lemma 1) Introduction to the highly systemic wireless industry 2) Challenges that Qualcomm faces –Within the Cellular industry Qualcomm faces the challenge of a new standard - WCDMA. –Within the larger Wireless Industry Qualcomm faces the challenge of another new standard – WI-FI (802.11) 3) Wireless data opportunities

December 8, Cellular System Components Overview Mobile Phone Antenna & Base Station Backend Equipment – Switching, Billing etc. Air Interface & Frequency T1, T3 lines

December 8, Cellular Technologies Analog – Uses the complete frequency for one call. Time Division Multiple Access (TDMA) – Divides the frequency into time slices, e.g. US-TDMA and GSM. Analogous to many pairs of people speaking with pauses that are so small that no one notices the delay. Code Division Multiple Access (CDMA) – Call signals are transmitted simultaneously, but using different orthogonal codes. Analogous to many pairs of people speaking simultaneously in mutually exclusive languages. Advantages of CDMA Times the Capacity Improvement Lower power usages => longer battery life and less over heating issues Geared for Data

December 8, Cellular Systemic Industry – 2G CDMA (20% of World Market) GSM (70% of World Market) Technology Chips & Software Stack Phone Equipment Service Providers QCOM – 5% royaltiesNokia, Ericsson, Siemens, etc. QCOM – 95%, MOT, LSI, Samsung etc. Nokia, Ericsson, Siemens,etc. Nokia, Ericsson, Motorola etc. Nokia, Ericsson, Siemens, Alcatel etc. Samsung, LG, Sanyo, Sony-Eric, Motorola. LU, NT, Eric etc. Verizon, Sprint PCS, South Korea etc. Nextel, Cingular, T-Mobile, Europe etc.

December 8, Mobile Market GSM market CDMA

December 8, Cellular Systemic Industry – 2.5/3G CDMA-2000 (1X- 256Kbits/s EVDO-2.4 Mbits/s) GSM (GPRS – 40Kbits/s EDGE-70Kbits/s) Technology Chips & Software Stack Phone Equipment Service Providers QCOM – 5% royaltiesNokia, Ericsson, Siemens etc. QCOM – 95%, MOT, LSI, Samsung etc. Nokia, Eric, Siemens etc. Nokia, Ericsson, Motorola etc. Nokia, Eric, Siemens, Alcatel, Motorola. Samsung, LG, Sanyo, Sony-Eric, Motorola. LU, NT, Eric etc. Verizon, Sprint PCS, Nextel, South Korea Cingular, T-Mobile, ATT, Europe etc. WCDMA 2.4 Mbits/sec 2005 Nokia, Eric, Siemens, QCOM- 5% royalties. TI, Nokia, QCOM, LSI, Samsung etc. Samsung, LG, Nokia, Sony-Eric, MOT etc. LU, NT, Eric, Nokia, Siemens, Alcatel etc. Some parts of Europe China, India, Japan, South America etc.

December 8, QCOM CDMA Technologies Market share TOTAL marketCDMA2000WCDMA Revenues (52% of total $3B) $1.5B12.5%$12B Operating Margin (28%) $500MM QCOM Technology Licensing Revenues (34% of total $3B) $1B Operating Margin (89%) $900 MM -Qcom - 95% of the market -Scale (partnered with IBM) -Nokia/Ericsson have an advantage -5% royalties – guaranteed -There are more patent holders. How will they be compensated? * 2002 Annual Report √ √ √ ? Qualcomm`s current business

December 8, WCDMA Forecast

December 8, Pros and Cons supporting WCDMA Advantages WCDMA will be the only technology accepted in Europe (license) Upside - Royalty revenues from WCDMA up to $10 Billion Early adoption of WCDMA implies early increases in royalty streams Disadvantages QCOM less likely to be a major player in the chip market – cannibalize existing CDMA 2000 chip sales growth Potential adopters of CDMA2000 will adopt a wait and see approach. High uncertainty regarding demand (see previous slide)

December 8, Qualcomm Strategy in WCDMA Qualcomm is assisting in the early development and adoption of WCDMA This will cost Qualcomm significant dollars in R&D, specifically in optimizing WCDMA systems. Partnering with a major chip manufacturer to achieve scale. Hedging the bets Qualcomm is also rigorously pushing CDMA2000, and also its solution of GSM/1x to convert existing non-European GSM providers to CDMA2000

December 8, Wireless Convergence Cellular (3G) Laptop WI-FI (802.11/.15) FrequencyExclusiveShared; Free CoverageExcellent Coverage; Mobility Growing Coverage; No Mobility ManufacturersCellular ManufacturersD-Link, Cisco, Intel etc. Service ProvidersCellular Service ProvidersAirports, McDonalds, Individuals? Etc. ServicesVoice, 3G DataData, Voice over IP CostsService charge to end userFree to end user, Service provider pays ISP

December 8, Wireless Data User Segment Analysis Wireless Access Corporate AccessCommercial ServicesCommunication Speed Wireless LAN √ Mobile Service Providers X HighMediumLow Reach Wireless LAN X Mobile Service Providers √ LowHighMedium Mobility Wireless LAN X Mobile Service Providers √ MediumHighMedium Affordability Wireless LAN ? Mobile Service Providers ? LowMediumHigh Wireless Access Corporate AccessCommunication

December 8, Qualcomm WI-FI Strategy Qualcomm may incorporate WI-FI into its chips. Reasons : WI-FI can never directly compete with 3G cellular because –Low Coverage –No Mobility –Less security WI-FI can add the following benefits to Qualcomm’s chips –Cheaper last mile solution for service provider –Higher data rates without mobility Anything that grows the demand for data services is good.

December 8, The Wireless Data Revolution Wireless Data development phases: 1.Person to Person 2.Person to Machine 3.Machine to Machine Cellular Data Strengths: 1.Mobile 2.DSL like Data rate Cellular Data Weaknesses: 1.Input/Output Constraints 2.Lack of the “Killer Application”

December 8, Conclusion The wireless industry is a very systemic industry, composed of various other systemic chains within chains. However, it is in everyone’s interest to grow consumer demand for wireless, specially wireless data, and this is what in the end drives the overall strategy of all the wireless companies, cellular and non-cellular. The upcoming wireless data boom shall create great opportunities for the prepared entrepreneur.