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To: slacker711 who wrote (6397)	2/9/2000 2:17:00 PM
From: Ruffian	Respond to of 13582

Zhongxing puts GSM pieces into place By Sunray Liu EE Times (02/09/00, 11:57 a.m. EST) SHENZHEN, China — Zhongxing Telecom Co. Ltd., one of China's four domestic telecommunications equipment suppliers, said it has completed the design of protocol stack layer software for use with Global System for Mobile communications (GSM) handsets. That puts the equipment maker among a select group of approximately 10 cellular phone vendors in the world able to develop its own bottom-layer software. Zhongxing's protocol software continues to run on imported chips, however. After successfully testing the software, the company said has begun developing chip sets for GSM cellular phones. Industry sources meanwhile said Zhongxing is also working on alternative designs using a rival standard. Zhongxing said it completed work on Layers 2 and 3 of the protocol stack last year after it mastered the design of application layer software, a baseband module and RF modules. Zhongxing plans to complete design work on RF and baseband chips for a new design for an advanced GSM handset, along with Layer 1 software, in the next 12 months. At that point, Zhongxing will own all intellectual property (IP) used to design and manufacture its cell phone, including hardware, software and chip designs. Dependence spurned The GSM effort illustrates how Chinese companies have been striving in recent years to break their dependence on foreign designs and what many Chinese consider exorbitant royalties paid to foreign companies. The government is also using the IP push to nurture its emerging high-technology industries. Chinese manufacturers produced about 23 million GSM handsets in 1999. The Ministry of Information Industry said China would produce 37 million more this year. Most are still manufactured using foreign system and component designs and so-called "solution-class" cooperation, in which Chinese OEMs develop only the design for the handset's external form, along with application software for foreign-designed handsets. By developing their own GSM designs, it is estimated that Chinese manufacturers can avoid paying licensing fees totaling $1 million, or $10 in software licensing fees for every 100,000 handsets produced. The savings are significant because price sensitivity is a growing problem here as cell phones become a commodity item. Beyond price, however, the technical advantages of homegrown GSM designs will have a far greater impact on Chinese telecom manufacturers, observers said. Zhongxing said its new design could help it increase cooperation with leading global chip makers who are increasingly targeting wireless telecommunications applications. Many, including CDMA developer Qualcomm Inc. (San Diego), are targeting the lucrative Chinese cell phone market. Closer cooperation could also yield new features and applications for the Chinese market, allowing Chinese manufacturers to escape the limitations of using third-party bottom-layer software in their designs. Ambitious schedule Zhongxing has so far shipped two types of handsets in the Chinese market. It plans to develop a new model every three months. Industry analysts said the ambitious design schedule would bring more pressure on local and overseas producers to accelerate design cycles. An industry source said Zhongxing is Qualcomm's sole Chinese research and development partner for code-division multiple access (CDMA) products. The company is also expected to be included in the royalty and technology transfer agreement signed by Qualcomm and China Unicom on Feb. 1. The framework agreement calls for Qualcomm to to grant royalty-bearing licenses to Chinese manufacturers of CDMA equipment. China Unicom, also known as China United Communication Corp., operates a GSM network along with state-owned market leader China Telecom. China Unicom said its plans to launch a 10 million-subscriber CDMA network later this year. Zhongxing and other Chinese companies will become second sources of CDMA equipment for China Unicom's planned network. Chinese government agencies such as the State Planning and Development Committee and the Ministry of Information Industry continue to worry, however, that domestic equipment makers will still be dominated by U.S. and Korean suppliers. Outside observers said the government fears competition and loss of China Telecom's stranglehold on the Chinese wireless market. Private estimates of China Telecom's market share run as high as 95 percent.