US mobile silicon giant Qualcomm is to take a stake in South Korea’s third-largest handset vendor, Pantech, as part of a debt-to-equity swap. The handset-maker said in a statement that Qualcomm will become a minority shareholder in both Pantech & Curitel Communications Inc. and Pantech Co. Ltd., but will hold no more than 15 percent of the outstanding common shares in either company and will be “a passive investor” with no participation on the board or management. According to Dow Jones Newswires, the handset-maker said in a regulatory filing that the company will pay US$76.3 million in the debt-to-stock conversion to Qualcomm to settle unpaid royalties. “Pantech has enjoyed a long-standing relationship with Qualcomm and benefited from working closely with the company, including using Qualcomm’s leading technologies, components, software and technical support,” said a spokesperson for Pantech. Dr. Cha Young Koo, senior vice president and president of Qualcomm Korea, added that the deal would create “a stronger platform on which Pantech can continue to build its prior successes in developing unique and innovative products.”
Pantech is the third-largest handset vendor in South Korea after Samsung and LG (both also major Qualcomm customers), but is aiming to bolster its standing in international markets such as the US and Japan. It said it has been the top foreign handset brand in Japan by sales volume since 2005, and is planning to launch new smartphones via AT&T and Verizon in the US. Despite the recession in the handset market, Pantech says it has been in the black for eight consecutive quarters (since April 2007). The Qualcomm deal will take place in stages over a number of months and is subject to certain closing conditions.