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Nokia Announces San Diego Work Force Layoffs

Company Stops Making Phones With Qualcomm's Patented Technology

POSTED: 8:22 am PDT August 9, 2006
UPDATED: 6:46 pm PDT August 9, 2006

Nokia will halve its San Diego work force of 1,100 employees as a result of its decision to stop making phones that use Qualcomm's patented technology, it was reported Wednesday.

The Finland-based company has long complained that Qualcomm charges too much for its patents on the technology known as CDMA, or code division multiple access, The San Diego Union-Tribune reported.

Nokia increased its San Diego presence in 1999, opening its 185,000-square-foot facility in Scripps Ranch and doubling its work force in hopes of becoming a dominant player in the CDMA phone market.

But during the past year, Nokia and Qualcomm have been squabbling over the renewal of a cross-licensing deal that allows the companies to use each other's technology.

In June, Nokia said it would no longer manufacture mobile phones using CDMA technology and scrapped plans to join forces with Sanyo to create a separate company focused only on CDMA phones, according to the newspaper.

The layoffs at Nokia, which will affect employees who work on the CDMA technology, will not take place for the next couple of months.

During the interim, the company will set the stage for the restructuring, which will include allowing workers to opt for severance packages or apply for new positions at a pared-down operation, according to the Union-Tribune.

The employees who remain will work on another cell phone technology called GSM, or global system for mobile communication, the newspaper reported.

Analysts said Nokia's layoff plans put further pressure on licensing negotiations, which center in large part on next-generation patents regarded as likely to have an impact on the future of both Nokia and Qualcomm. The current cross-licensing agreement expires April 9, the newspaper reported.

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