China Reaffirms Plans to Use Qualcomm
Technology (Update1)
By Peter Harmsen
Beijing, May 29 (Bloomberg) -- The Chinese government reaffirmed its
commitment to building a wireless-phone network using the technology of San
Diego-based Qualcomm Inc., developer of the world's fastest-growing mobile
phone standard.
Qualcomm shares plunged 26 percent last week on concerns of possible
sales setbacks in South Korea and China and on a report in the Asian Wall
Street Journal that China United Telecommunications, the nation's
second-largest phone company, changed its mind about using Qualcomm's
code division multiple access (CDMA) technology.
The best way for the Chinese government to support China Unicom, as the
No. 2 phone company is known, is to let it expand and run a network based
on CDMA, Zhang Chunjiang, vice minister of the information industry, said in a
report carried by Xinhua news agency.
``Unicom never said it won't use CDMA technology, and Zhang Chunjiang's
comment shows the rumor that Unicom will stop developing CDMA isn't true,''
said Zhang Jiakun, a Unicom spokesman. ``Unicom will definitely continue to
develop the CDMA network.''
Qualcomm's Beijing office also said it had received assurances from Unicom
that it will go ahead with the establishment of the CDMA network.
The stakes are high for Qualcomm and 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.
Qualcomm's technology is used by 57 million people worldwide.
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 the U.S. House of Representatives granting China
permanent access to the U.S. market. The legislation is now pending before
the U.S. Senate.
Qualcomm said passage of the bill in the House, considered the major hurdle,
removed a major obstacle to introduction of the company's technology 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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