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Siemens Prepares for China DealSiemens Prepares for China Deal

German vendor is bullish on prospects for contract awards from its joint venture developments in China

February 20, 2003

3 Min Read
Siemens Prepares for China Deal

CANNES, France -- 3GSM Congress -- At least one next-generation wireless network in China will be based on the country's homegrown 3G standards-based technology, TD-SCDMA, according to a senior executive at Siemens AG (NYSE: SI; Frankfurt: SIE).

While general uncertainty surrounds the forthcoming awards of 3G licenses in the world's single largest market (see What's Up With Chinese 3G?), Christoph Caselitz, president of networks at the German company's information and communications mobile networks division, is quite confident about what will happen.

"By the middle of 2003 the licenses will be awarded and at least one network will be TD-SCDMA, a technology in which we have significant intellectual property," he says. "With that timescale, we will see TD-SCDMA equipment becoming available to the operators during 2004."

The final licensing decision of the Chinese authorities is of great importance to Siemens, which has spent years helping Chinese partner Datang Mobile Communications Equipment Co. Ltd. develop TD-SCDMA equipment.

Caselitz's prediction is seconded by John Leonard, mobile business strategy and planning director at Lucent Technologies Inc. (NYSE: LU) -- the clear market leader in the CDMA/CDMA2000 infrastructure market with about a 46 percent share, according to a recent Wireless Oracle report, "The 'X' Factor: Competitive Positioning in the CDMA Infrastructure Market."

"There will be one TD-SCDMA license and three wideband CDMA [WCDMA] licenses in China -- that's the way we see the market developing," says Leonard.

And with Lucent not participating in the niche TD-SCDMA equipment market, and struggling to make an impression in WCDMA (it has no network contracts to date -- see Lucent Faces UMTS Crunch), that may not be the best scenario for the U.S. vendor, nor any of the other vendors, like Motorola Inc. (NYSE: MOT) and Samsung Corp., that would benefit from a network evolution path involving CDMA2000 networks.

If China's licenses do require the build-out of TD-SCDMA and WCDMA networks, that would play much better into the hands of Siemens. In addition to being a strong contender for any TD-SCDMA infrastructure deals, Caselitz is also eyeing the opportunities for WCDMA business in China, an area where Siemens is already a significant player, in league with its 3G networks partner NEC Corp. (Nasdaq: NIPNY). Siemens board member Lothar Pauly claims Siemens has delivered more than 8,000 WCDMA base stations to operators, "giving us a 20 percent market share in this sector."

Other vendors that would likely win significant business from WCDMA network infrastructure contracts include Nokia Corp. (NYSE: NOK), Nortel Networks Corp. (NYSE/Toronto: NT), and LM Ericsson (Nasdaq: ERICY).

WCDMA networks using jointly developed Siemens/NEC infrastructure are about to go commercially live in the U.K. (Hutchison 3G UK Ltd.) and Italy (H3G Italy), greenfield 3G operators controlled by Hutchison Whampoa Ltd. (Hong Kong: 0013).

— Ray Le Maistre, European Editor, UnstrungEditor’s note: Neither Light Reading nor Unstrung is affiliated with Oracle Corporation.
(nor with the Orbital Recovery Corporation)

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