Texas Instruments Says Suit Won't Stop Its CDMA Push - TheStreet

Texas Instruments Says Suit Won't Stop Its CDMA Push

The take on Qualcomm's suit is that it's aimed at Texas Instruments' joint venture with Nokia.
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Undeterred by a

lawsuit filed last week, wireless chipmaker

Texas Instruments

(TXN) - Get Report

on Monday said it will produce sample CDMA chips as planned later this quarter and wage a vigorous defense against the suit by


(QCOM) - Get Report


"Qualcomm has enjoyed many years of selling CDMA chips against little or no competition. TI intends to establish this market as a level playing field in which open competition prevails and consumers benefit," a spokesman for TI said in a prepared statement.

In a suit filed in Delaware on Monday, Qualcomm accuses TI of breaching the confidentiality of a patent agreement the companies signed in 2000. The suit asks for unspecified damages, and more significantly, seeks to terminate the agreement itself.

Analysts who follow the companies believe the suit could, at the very least, delay TI's plan to enter the open market for CDMA chips, a development that would help Qualcomm defend its 90%-plus share of that market. TI plans to enter the open market via a joint venture with


(NOK) - Get Report



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"If successful, the lawsuit would protect Qualcomm from potentially losing market share to the joint venture and eliminate any pressure the JV could exert on Qualcomm's pricing structure," Lehman Brothers analyst Malcolm Shu wrote in a note to clients on Monday. "Regardless of the outcome, CDMA handset vendors in the meanwhile are less likely to consider the TI chipset until the legal uncertainty has resolved."

CDMA, or code division multiple access, is a method for transmitting simultaneous signals over a shared portion of the spectrum. It is generally considered cheaper to implement, and provides more capacity than rival digital technologies. Analysts expect it to be the basis for future generations of cell phones and services, including so-called 3G.

However, for the present, the suit won't affect TI's right to continue to supply CDMA chips to Nokia, Shu added. Lehman Brothers has an investment banking relationship with Qualcomm, but not Texas Instruments.

Although there was some feeling that the suit would hurt TI shares on Monday, neither TI nor Qualcomm have moved much. In recent trading Qualcomm was up 50 cents, or 1%, to $38.35; TI was up 6 cents, less than 1%, to $19.05.