Qualcomm is set to bar VLSI Technology’s new parent company, Philips Electronics, from selling its chipsets for use in CDMA-based digital cellphones. VLSI was originally awarded a licence for the technology in the mid-1990s.

A Qualcomm spokeswoman said: “Because VLSI was acquired by Philips, VLSI is no longer granted a licence for the chipset.”

The action will leave the market with fewer chipset sources in what has become a booming CDMA sector. According to research by Dataquest, worldwide production of CDMA handsets will grow from 8.7 million units in 1997 to 69 million in 2002.

The move was obviously unexpected as, in recent weeks, VLSI/ Philips had stated that the company was moving ahead with the development and sale of its CDMA-based chipset line - an integrated product based on the ARM7 risc chip.

It appears that both Ericsson and LG Electronics were evaluat-ing the VLSI-developed chipset along with a number of other OEMs.

Industry analysts point out that Qualcomm owned 89% of the CDMA-based chipset market in 1998, a figure that is expected to drop to 77% by the end of 1999, declining still further to 43% by 2000. This falling share has been cited as a possible reason for withdrawing the VLSI licence.

The change of heart over licensing CDMA to VLSI comes only six months after Qualcomm and Ericsson settled their dispute over intellectual property rights to the technology. Both parties agreed to jointly support a single world CDMA standard.

Ericsson declined to comment on whether it was interested in buying the mobile telephone division of Qualcomm.

But a spokeswoman says the purchase will not fit in with the company’s acquisition policy. Qualcomm aims to sell its mobile business by the end of the year.