Microsoft Corporation (NASDAQ:MSFT) expects the production costs of handsets that uses Windows Phone 7 software to drop by over half next year. Qualcomm Inc. will allow phones that run on the Windows Phone 7 operating system to be produced for under $200. This is a substantial drop from the $400 manufacturing cost from when the mobile operating system was introduced last year. This announcement was made by Windows Phone head Andy Lees. Microsoft works exclusively with Qualcomm for chip development. [BusinessWeek]

This graphic from Thomson Reuters shows just who is suing whom in our current patent wars.

Game streaming startup company Gaikai has raised $30 million in a third round of funding. Games are stored in the cloud and is delivered through high-speed Internet connections when on demand.

Viddy is a mobile video sharing start-up company that has raised $1.6 million in a first round of funding. Viddy had launched a mobile video creation and sharing application for the iPhone. This round of funding was provided by Battery Ventures, Bessemer Ventures, Qualcomm, Jarl Mohn, and early YouTube employees. Viddy said that they are creating a “Twitter-style feed of videos from friends, family, celebrities.” Viddy was founded by JJ Aguhob and Brett O’Brien. [soCalTech]

ChaCha.com is a question and answer service that has raised $3 million in funding from Qualcomm Venture Partners. This puts ChaCha at a total of $75 million in funding. ChaCha CEO Scott Jones said that Qualcomm’s “experience and insight into the global wireless ecosystem will help ChaCha continue to expand its service worldwide.”

Microsoft Corporation (NASDAQ:MSFT) made an announcement today that the next version of the Windows operating system will support the System on a Chip (SoC) architectures, which include ARM-based systems from their partners: NVIDIA Corp., Qualcomm Inc., and Texas Instruments. Intel and AMD will continue work on low-power SoC designs that support Windows on the x86 architecture. Below is the full press release:

QUALCOMM, Inc. (NASDAQ:QCOM) is nearing a deal to buy out Atheros Communications, Inc. (NASDAQ:ATHR) for $3.5 billion ($45 per share). A deal is expected to be announced tomorrow. The talks are currently in final stages, but nothing is confirmed yet. This deal would be about a 22% premium to what Atheros was trading at mid-day today. This would be Qualcomm’s largest acquisition ever. [NYT]

QUALCOMM, Inc. (NASDAQ:QCOM) is investing $1 billion to build a new computer-display plant in Taiwan according to the island Ministry of Economic Affairs. The investment will be made later this year. Qualcomm said that the plant will focus on making screens using Mirasol technology. Qualcomm began a partnership with Cheng Uei Precision Industry Co. in Taiwan around 2009 to produce lower powered displays for e-book readers. [BusinessWeek]