March 31, 2005

Nokia is in advanced discussions to purchase CDMA EV-DO phones from the manufacturing subsidiary of Korean CDMA carrier SK Telecom.

A Nokia spokesman said the company has made no such announcement and is "unable to comment on rumors."

If Nokia does sign a deal with SK Teletech, the handset business of SK Telecom, it would mark a major change in strategy for the world's No. 1 handset vendor.

Nokia has long refused to outsource the development and manufacture of its phones, unlike most of the rest of the handset market.

In CDMA specifically, Nokia has relied on its own chipsets rather than purchase CDMA chips from rival Qualcomm Inc. If Nokia does sign an agreement to purchase EV-DO phones from SK Teletech-which uses Qualcomm chips-Nokia would somewhat reverse its long-standing aversion to Qualcomm.

Indeed, Nokia has apparently hinted at the softening of its stance to industry analysts.

"Nokia is now more amenable to pursuing alternative chipset strategies than it has been in the past," wrote investment banking firm Lehman Brothers in a March 7 note to investors. "(Nokia) management suggested that it is free to pursue a range of options to bring (EV)-DO models to market.

These include using ODMs (original design manufacturers), purchasing chipsets from Qualcomm, and perhaps from third-party vendors. Management reiterated its long-term commitment to internal chipset development."

Nokia has recently managed to score deals with CDMA carriers like Verizon Wireless and Sprint PCS to sell its phone.

And at the recent CTIA trade show in New Orleans, Nokia showed off several new CDMA products. However, both Verizon and Sprint are rapidly moving to EV-DO networks, and Nokia has yet to release EV-DO phones.

Source: RCR News