Chinese vendors will take most of the TD-SCDMA orders

March 12, 2007

Chinese indigenous equipments providers are predicted to take a majority stake, or as high as 85%, in China Mobile's TD-SCDMA equipments purchase, while the major international manufacturers are also encouraged to actively take part in the bidding. It thus exhibits a visible and somewhat complicated partnership, as well as competition in front of the participating Chinese telecom products makers and their foreign counterparts.

China Mobile is reported to place a maximum of CNY 26.7 billion worth of orders for TD-SCDMA standard-based 3G equipments this year.

Huawei, ZTE, Nokia, Ericsson and Alcatel are said to have joined the bidding for core networks, and Datang (a major Chinese developer of TD-SCDMA technologies), Potevio, ZTE, TD Tech and Guangdong Postcom (Datang Mobile's contract maker in Guangdong Province) are vying for orders of wireless access system.

As early as before TD-SCDMA's prospect in China turned to be as clear as it is now, Shenzhen-based Huawei and Siemens have set up a joint venture TD Tech, committed to the development, production and marketing of TD-SCDMA-related technologies and products.

And besides, Nokia established a 49-51 joint venture with Potevio, a leading Beijing-based IT equipments and service provider, which is also betting on the commercial application of TD-SCDMA standard in China's 3G era.

However, after Nokia and Siemens in June last year merged their global telecom businesses, the two companies' 3G joint ventures in China fell into tangled relationships.

For Huawei, a leader in providing next generation telecom products and solutions, the twists in the course of cooperating with Siemens is influencing its real power of control in the TD- SCDMA market, and on the other hand, Huawei wants Nokia and Siemens' Beijing-based offerspring to take over Siemens' stake in TD Tech as soon as possible, but it has not received any reply to it so far.

To make it more difficult to straighten out their relations, the president of Nokia's China operation recently expressed that it was necessary to integrate TD Tech and its Potevio-Nokia joint venture, since the two combos were both originally built for the TD-SCDMA market.

So how will these four companies play their own roles, and what kind of roles they are going to face in the upcoming TD- SCDMA arena? Yet it has found an answer to these questions, they are now pushed to the battle for China Mobile's long-awaited orders.

Insiders estimated that Huawei and Nokia would individually take part in bidding for core network orders, while their joint ventures would tender for corresponding wireless system equipments like base stations.

But as the industry's prediction, the core networks will account for only 15% of the entire order offerings of China Mobile, the country's largest mobile carrier, so what a big cake Huawei would secure in the bidding will still to a large extent depend on its TD-SCDMA-specialized joint venture.

Besides these four companies, Ericsson will partner with ZTE to scramble for TD-SCDMA market shares.

The two companies had entered into partnership in 2005 in research and development of TD-SCDMA products, and this time, Ericsson will pack ZTE's TD-SCDMA base stations into its wireless access networks to bid for China Mobile's contracts, revealed informed people from Shenzhen-headquartered ZTE, the largest listed telecom equipments maker in China.

Anyway, overseas giants are encouraged to take part in China's TD-SCDMA deployment, as they are hoped to help open a broader market for TD-SCDMA standard in other markets, especially in Asia, Africa and East Europe that have not built 3G networks, and China's local equipments makers own evident advantages in this field, as they have a considerable part of intellectual property rights in TD-SCDMA standards.