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The Finnish company said on it would pull out of CDMA phone manufacturing, which it sees as a shrinking market in the longer term. Recent developments may indicate that the CDMA emerging markets business is looking more challenging.

Both companies have a bitter history over technology licensing and patent infringement cases and Qualcomm laid down new terms for the Sanyo-Nokia venture that were unacceptable to Nokia.

Based on joint negotiations and extensive analysis, Nokia and Sanyo concluded that it is more beneficial to pursue other options individually for their CDMA handset business.

Moving forward, Nokia intends to selectively participate in key CDMA markets, with special focus on North America. Planning to ramp down its own CDMA R&D and manufacturing by April 2007, Nokia will continue to offer Nokia-branded CDMA handsets, made by contract manufacturers, in North America where the standard is popular.

"We feel it would not be in our best interests to make an agreement that proved to be less beneficial than originally anticipated," said Kai Oistamo, Executive Vice President, Nokia, Mobile Phones. "After exploring all available opportunities and making every effort to create a sustainable CDMA business, this is our only viable option."

Sanyo and Nokia will announce their future plans for their respective CDMA businesses in due course.