Qualcomm, which has a dominant market share in the United States with phones and networks based on its Code Division Multiple Access (CDMA) technology, also announced a number of licensing deals for software and standards to improve the quality of audio and video streaming on mobile phones.
The announcements were made ahead of a Qualcomm presentation on new wireless technologies set for Monday afternoon at the CTIA Wireless 2004 trade show in Atlanta.
The latest generation of phones and networks using the company's CDMA technology offer higher data speeds and richer features, like cameras, music, video, and games.
To support those features, Qualcomm said it would license ATI's Imageon platform for graphics into its mobile station modem phone chips, adding 3D gaming to new phones.
The Imageon technology will be integrated with Qualcomm's 7000 series of mobile station modem phone chips. Qualcomm also said it would enable stand-alone ATI chips to work with its current MSM 6000 generation of wireless chipsets, or groups of computer chips designed to work together.
National Bank Financial analyst Deepak Chopra saw the deal as a boon to ATI, potentially adding anywhere from 5 cents to 12 cents per share of earnings depending on how widely adopted the Imageon-enhanced chips become.
Schwab SoundView analyst Hans Mosesmann said the deal promised both short- and long-term benefits for Markham, Ontario-based ATI.
"The financial impact of today's announcement could be seen as soon as late 2005, however the implications are much more significant given that the wireless 3D market could indeed rival the size of today's PC 3D graphics market," he said in a note.
Dave Orton, ATI's president and chief operating officer, said ATI will receive a royalty on each Qualcomm chip sold with the Imageon technology integrated. He declined to detail the size of the royalty.
In addition to the ATI partnership, Qualcomm struck a deal with RealNetworks that will allow Qualcomm to use RealAudio and RealVideo technologies with its chipsets beginning in the second quarter of this year.
Owners of phones with Qualcomm's chips and its Qtv software will be able to play streaming audio and video in Real's format. RealNetworks said it is shipping or scheduled to ship its RealPlayer software on phones from five different manufacturers.
Qualcomm also said it has licensed the aacPlus audio standard from Coding Technologies for better audio quality at lower data rates, and said it will integrate the H.264 video compression and decompression standard, as well.
Separately, Qualcomm said more than 100 million applications have been downloaded worldwide on phones using its BREW software platform over the last two years.