BEIJING Qualcomm Inc. is launching an effort here to help Chinese OEMs produce code division multiple access (CDMA) handsets and basestations for the local and global markets. The move comes as Chinese CDMA network operators slash prices on competing GSM networks.
China established four CDMA trial networks here and in Shanghai, Xian and Guangzhou. Officials with the Chinese Ministry of Information Industry judged the networks a success, prompting the government to sign large equipment contracts with Motorola Co. and Lucent Technologies last April during a China-U.S. telecom summit.
Qualcomm (San Diego) has since moved to expand its presence here, opening an office two months ago that has introduced Chinese OEMs to its CDMA chip set, software, reference designs and development tools. Qualcomm plans to expand the office by hiring more engineers and marketing staff.
The CDMA expansion plan was slowed by the U.S. bombing of a Chinese embassy in April. At the same time, local users tended to opt for GSM services since GSM permitted nationwide roaming and provided more service options. On Dec. 1, however, Beijing Great Wall Telecom, a CDMA operator here lowered its prices for the service, and demand quickly surged.
The result is that more customers are being drawn to the service as network operators, system suppliers and OEMs restart their CDMA projects. OEMS that had been producing GSM handsets under government license now have another opportunity to reach the local and overseas markets, observers said.
"Our mission is to provide key technologies needed to make handsets and basestations work for CDMA," said Johan Lodenius, a Qualcomm vice president. "We'd like to work very closely with Chinese manufacturers to enable the Chinese industry to be a major force for developing CDMA equipment."
Unlike some of the GSM giants, Qualcomm is preparing to offer its latest technologies to Chinese OEMs. In addition to its widely adopted MSM3000 chip set, Qualcomm is scouting OEM customers here for a next-generation MSM3100 IS-95B chip set. The new chip set permits production of lightweight handsets that provide 300 hours of standby time.
Meanwhile, Qualcomm promises to help OEMs design and produce handset and basestations. Roughly 25 of Qualcomm's 29 CDMA customers are located in Asia. With Qualcomm's help, Hitachi Ltd. is said to have shipped its CDMA handsets within six months.
Data communications services are emerging as a profitable business in China for wireless carriers, handset makers, content providers and component vendors, such as LCD panel makers. China Mobile Telecom recently said it plans to open a wireless Web-browsing service on its GSM network next year based on the wireless application protocol.
Demand for higher-capacity voice and data traffic is expected to boost CDMA services in China as well. Wireless Internet services are expected to help CDMA attract more subscribers and handset users. Qualcomm is offering a 64-kbit/second data rate, as has been operating on Korean and Japanese networks. OEMs are expected to upgrade the scalable design to 2.4 Mbits/s using pin-compatible chips.
An industry source said Chinese designers from different industries have expressed interest in CDMA's data communications features. Qualcomm hopes to cooperate with designers on applications with high-speed wireless capabilities, such as MP3 players, MPEG-4 devices, handheld PCs and PDAs.
Qualcomm executives said they are looking for Chinese partners that are willing to commit to CDMA for the Chinese market. Partners would tap Qualcomm's CDMA reference design to devise products with specific feature sets for various Chinese market segments. The U.S. company thus hopes to amass sufficient OEM support to take on GSM suppliers in a range of market segments.
"I'm fully convinced that China will become a very significant CDMA market and that Chinese producers will become world-class manufacturers not only in the domestic market but also in the world-wide market," Lodenius said. "We have some relationships already established." The company will announce Chinese partners soon, he added.
China's domestic third-generation wireless standard, TD-SCDMA, is a CDMA technology based on the time-division duplex mode. Analysts said export opportunities could be huge if local manufacturers consider other international 3G standards in their designs.