June 24, 2003 1:22 PM PDT

Sony Ericsson: No CDMA in U.S. phones

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Handset maker Sony Ericsson Mobile Communications said Tuesday that it will stop making some cell phones meant for North America, a possible blow to chipmaker Qualcomm.

Sony Ericsson, a joint venture of the telephone-equipment giant and the consumer-electronics powerhouse, plans to phase out production of CDMA (Code Division Multiple Access)-based cell phones meant for the United States and Canada. Sony Ericsson said in a statement that it will continue to make phones for the Japanese market based on the CDMA standard.

Sony Ericsson will focus on developing cell phones using the world's most popular standard, GSM (Global System for Mobile Communications), according to the statement. About 75 percent of the world's phones use GSM, while about 18 percent are powered by CDMA.

San Diego-based chipmaker Qualcomm owns most of the patents to CDMA and has earned billions licensing the technology to handset makers. It did not return a phone call seeking comment.

Sony Ericsson lost about $114.1 million in the first quarter when it also slipped from fourth to fifth place in the global handset market, according to most cell phone industry surveys. Both Sony and Ericsson have since threatened to stop funding the venture if it doesn't turn itself around.

"Today's announcement ensures continued growth," Sony Ericsson President Katsumi Ihara said in a statement.

Also on Tuesday, Sony Ericsson said it plans to eliminate 500 jobs at research development facilities in Germany and the United States.


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