Siemens, Huawei in Multi-Million Chinese Phone Venture

By Ron Miller

Hoping to jump start the TD-SCDMA (Time Division – Synchronous Code Division Multiple Access) market in China, Siemens Information’s mobile division and Huawei Technologies have announced a joint venture in which both companies will invest more than $100 million U.S. dollars to promote TD-SCDMA, a new 3G cell phone standard being launched in China.

The latest agreement on developing the “T3G” technologies marks the official launch of joint development activities. Under the terms of the agreement, Siemens mobile will hold 51 percent of the joint venture, while the Chinese telecommunications company Huawei Technologies holds 49 percent. Siemens mobile is contributing more than 200 employees and Huawei 100.

Lothar Pauly, Chief Operating Officer of Siemens mobile and Yafang Sun, Chairwoman of Huawei Technologies, both expressed confidence at the contract signing that their combined strength and know-how would give TD-SCDMA a powerful push for market success in China.

“We are proud to have found in Huawei a partner who shares our vision for TD-SCDMA. Together, we will make the standard a success in China. It is Siemens’ declared aim to become the 3G market leader in China,” Pauly said.

“We are looking forward to working together with Siemens mobile in the future, a leading mobile communications company,” Yafang Sun said.

They hope to develop the first products in the coming months and to participate in official 3G trials with operators by the end of this year.

Within the next several months, the companies expect to have more than 350 employees on the project. The joint venture will be headquartered in Beijing, but engineers will also work on infrastructure product development in Shanghai. Siemens already transferred its global R&D, marketing and sales staff for TD-SCDMA to Beijing previously.

Neil Strother, senior analyst with research firm In-Stat/MDR, said the venture is a smart move for both Siemens and Huawei as they try to take advantage of the unique Chinese 3G market.

“But it’s another blow against attempts to create a global 3G ‘standard,'” he added. “The rest of the world is unlikely to adopt TD-SCDMA, since WCDMA (and its various flavors) are already being deployed. And the CDMA folks are fairly happy with their EV-DO path, while others, down the road, will go with EV-DV,” Strother noted.

“So, there really isn’t a standard. There are standards. This joint venture is one more sign of the continuing fractured technology landscape that is the wireless industry. Everyone wants to be the leader, and then make others follow. The Chinese are no different, I guess. From a purely capitalist’s viewpoint, the competition among “standards” does tend to keep everyone sharp, and that isn’t all bad.

Developed by Siemens, TD-SCDMA, or Time Division – Synchronous Code Division Multiple Access, combines an advanced TDMA system with an adaptive CDMA component in an effort to help 3G network operators manage both symmetric circuit switched services (like voice and video) and asymmetric packet switched services (like mobile Internet data flows).

The technology is complementary with both GSM , the de facto standard in Europe and Asia, and the W-CDMA 3G standard. China is essentially pushing the standard as its own.

Both partners hope that TD-SCDMA will succeed in the Chinese market and convince operators in other countries to adopt the standard. Manufacturing and marketing of the standard will, however, initially be focused on China.

“The cooperation will drive forward the commercial use of TD-SCDMA. Both companies will also be able to optimize their development costs. Huawei works with the top companies in the telecommunications industry. We develop and supply our leading 3G products and solutions worldwide,” Yafang Sun said.

Siemens started its development in TD-SCDMA back in 1998 and has to date invested more than EUR 170 million in this technology. With several test networks running in China, Siemens has proved that this technology is fast approaching market maturity.

With 270 million mobile phone customers today, China is the world’s largest mobile communication market and is expected to grow faster than the world market for several years.

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