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Qualcomm Courts Chinese 3G

Light Reading
LR Mobile News Analysis
Light Reading
2/27/2003

Qualcomm Inc. (Nasdaq: QCOM) is on a major charm offensive with China's telecom operators, as it attempts to stamp an early footprint on the country’s uncertain 3G market.

The CDMA vendor has held meetings with 3G hopefuls China Telecommunications Corp. (NYSE: CHA) and China Netcom Corp. Ltd. – two fixed-line carriers hoping to be big players in the mobile field – in an attempt to promote CDMA2000 as the next-generation wide-area wireless technology of choice.

Both carriers remain uncommitted to any specific standard, as the technical requirements of the 3G licenses to be awarded are as yet unknown – though some firms claim to have some sort of prior knowledge of certain details (see Siemens Prepares for China Deal). At present, however, it is unclear how many licenses will be awarded, when they will be awarded, to which companies, and under what conditions (see What's Up With Chinese 3G?).

So Qualcomm is keeping its options open, and it's not limiting its schmoozing to the wireless newcomers. It has been maintaining a close relationship with existing CDMA operator China Unicom Ltd., and has just announced a joint venture with the operator to promote CDMA services (see Qualcomm, Unicom Brew JV).

Qualcomm's motives in China, the largest mobile market in the world, are quite obvious. It stands to gain financially from the deployment of any of the 3G flavors – CDMA2000, wideband CDMA, and China's homegrown TD-SCDMA – set to be adopted in China's networks, as it is the owner of essential CDMA patents, which it licenses to great effect (see Qualcomm Posts Record Q1). It also produces a wide range of CDMA chipsets.

So why does it favor CDMA2000 over the other 'flavors'? Basically, because there are already many companies producing CDMA2000 infrastructure and handsets, and Qualcomm would see returns quicker from an already mature product set. The CDMA2000 evolution path, from 1xRTT to EV-DO to EV-DV, would also maximize Qualcomm's income.

Incidentally, the American vendor is hardly alone in seeking friends and favor in China. Siemens AG (NYSE: SI; Frankfurt: SIE), a co-developer of the TD-SCDMA standard, recently announced its sponsorship of the Chinese national football team (see Siemens Plays Ball in China). Now, that's what Unstrung likes to see: some truly international toadying!

— Justin Springham, Senior Editor, Europe, Unstrung

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