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Qualcomm Jumps on China Deal

The company will license key cellular technology in the country.

Shares of cell-phone maker


(QCOM) - Get QUALCOMM Incorporated Report

continued their sharp rise Tuesday on news the company has struck a deal to license key cellular technology in China.

By midmorning, Qualcomm was up 7 7/8, or 6%, at 134 15/16. The stock had risen about 15% on Monday in response to news reports that executives at Qualcomm were meeting with their counterparts at

China United Telecommunications

, the country's second-largest phone company. The deal was officially announced Tuesday morning. (Qualcomm closed up 9 1/8, or 7.2%, at 136 1/16.)

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Under the agreement, China Unicom will license CDMA wireless phone technology from Qualcomm. The system will be built by local Chinese manufacturers using the CDMA technology. Qualcomm will receive royalties on sales of the equipment.

The new technology is expected to allow China Unicom a selling point that will help it gain a bigger share of the roughly 40 million cell-phone users in the country. Rival phone company

China Telecom

currently supplies as much as 90% of that market using an older technology. The market is expected to almost double within the next year.

During the last year, Qualcomm has been a Wall Street darling, with its shares rising more than twenty-fold in 1999.

But last week the San Diego-based company's shares dropped sharply. Although the company's fiscal first-quarter earnings

beat Wall Street expectations, they did not quite live up to so-called "whisper numbers." Investors began to sell the stock after the company warned that shipments of CDMA chips and phones could fall in first-quarter 2000.

Qualcomm's stock fell about 40% in the days following the earnings report, but have bounced back as the deal with China has lifted investors' hopes.