Goal For Qualcomm: Repeat Performance Chip Competitors Grow Firm dominates CDMA market, but WCDMA could be different story.(INTERNET & TECHNOLOGY)

Byline: MIKE ANGELL

When it comes to making CDMA chips for cell phones, Qualcomm is king. But as a new generation of phones hits the market, the company may struggle to keep its reign.

The No. 2 supplier of all cell phone chips, Qualcomm owns most of the patents related to code division multiple access, or CDMA. Some 212 million cell phone users have CDMA models, with about 85% of those devices powered by Qualcomm chips. The rest use chips licensed from Qualcomm.

But another cell phone standard with a similar acronym -- wideband CDMA, or WCDMA -- is slowly appearing. And though Qualcomm has strong ties to the new technology, it faces a lot more competition.

"Qualcomm is considered the one to beat in WCDMA," said Michael Thelander, head of market research firm Signals Research Group. "But my view is that they're not going to be the dominant supplier. They can get there, but it will be much more difficult than on the CDMA side."

Qualcomm says it isn't worried. Since the company owns WCDMA patents, it earns royalty sales on every WCDMA phone -- even if the device uses a competitor's chips. And Qualcomm expects to be a top supplier of WCDMA chips, thanks to its track record in the CDMA realm.

"There's no reason to think (WCDMA won't) evolve like the CDMA business," said Bill Davidson, head of investor relations for Qualcomm. "It's all upside for us."