Financial News
Sun, 28 May 2000, 10:35pm EDT
China Says It Supports Cell Network Using Qualcomm Technology
By Peter Harmsen
Beijing, May 29 (Bloomberg) -- China said it is still committed to the development of a
wireless-phone network using a technology developed by San Diego-based Qualcomm
Inc., countering a report last week that the network is unlikely to be built.
The best way for the Chinese government to support China United Telecommunications,
the country's no. 2 phone company, is to let it expand and run a network based on code
division multiple access technology, or CDMA, Zhang Chunjiang, vice minister of the
information industry, said in a report carried by Xinhua news agency.
That could be good news for Qualcomm, whose shares plunged 26 percent last week
on concerns of possible sale setbacks in South Korea and China and a report in the
Asian Wall Street Journal that China Unicom would not build the CDMA network.
The stakes are high for Qualcomm, and for other foreign companies seeking a slice of
the Chinese mobile phone market. China had 43 million cellular phone users at the end
of last year, a number that could rise to 70 million this year.
Unicom agreed in February to license Qualcomm's CDMA technology. Then reports
surfaced that the Chinese government was delaying the projects in what analysts said
was a ploy to get U.S. support for China's bid to join the World Trade Organization.
The possible usefulness of the CDMA network as a lever to gain access to the
Geneva-based body may have been exhausted with the passage last Wednesday of a bill
in U.S. Congress granting China permanent access to the U.S. market.
The bill's passage, giving China permanent normal trade relations, or PNTR, was
greeted by Qualcomm as the removal of a major obstacle to the company's technology
being introduced in China.
``PNTR is particularly beneficial to Qualcomm, reducing the prior uncertainty of Chinese
government support for a major increase in the use of code division multiple access
technology by China Unicom and possibly others,'' Qualcomm Chief Executive Irwin
Jacobs said in a statement late last week. ``China has a rapidly expanding need for voice
communications and Internet access, both of which are well met by CDMA.''
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