Motorola's China Phone Ventures to Benefit From Qualcomm Pact
--From AOL News-- Cooters
Shanghai, Feb. 2 (Bloomberg) -- Motorola Inc.'s loss-making phone ventures in China stand to benefit from an agreement between Qualcomm Inc. and China Unicom that will pave the way for a nationwide code division multiple access mobile network, said Motorola's local partner.
The pact allows China United Telecommunications Corp., as the Chinese phone company is officially known, to use the patented technologies of U.S.-based Qualcomm to build a CDMA network for 10 million users this year.
The new network will challenge the now dominant global system for mobile communications standard, which boasts about 45 million subscribers in China.
``Qualcomm's agreement is great and will help boost our sales,' said Cai Zhuping, a spokesman for Eastern Communications Co., which has two phone manufacturing ventures with Motorola that produce only CDMA equipment.
Until now, China has limited the use of CDMA networks to just four Chinese cities, in part because it can negotiate lower prices as one of the world's biggest buyers of GSM equipment. China agreed only last March to allow wider usage of CDMA equipment from the U.S. as part of its bid to join the World Trade Organization.
The restricted use of CDMA caused the ventures between Motorola and Eastern Communications, called Hangzhou Motorola Cellular System Ltd. and Hangzhou Cellular Subscriber Ltd., to post losses in both 1997 and 1998, Cai said. They barely earned a profit last year, he said.
Opening Up
With the opening up of the CDMA market, Motorola and Eastern Communications expect to increase their investments in each of the ventures to $100 million from $30 million, Cai said. Approval from the Chinese government for the increased capital is expected soon, he said.
More use of CDMA equipment in China may allow Motorola and other U.S.-based phone equipment makers to take market share from Ericsson AB, now the largest supplier of mobile handsets on the mainland. Still, Ericsson is not staying away from CDMA completely.
The Scandinavian company bought Qualcomm's wireless network equipment manufacturing unit early last year for an undisclosed price. Ericsson officials couldn't be reached for comment.
In December Qualcomm sold its handset manufacturing business to Japan's Kyocera Corp., leaving the U.S company to focus on developing chips for CDMA products and licensing its technology in return for royalty payments.
Feb/02/2000 5:09 |
