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NEC eyes Chinese 3G market with carrier equipment base
By Martyn Williams

NEC Corp. has started assembling third-generation (3G) cellular network equipment in China as part of its preparation for the long-awaited issuing of 3G licenses in the country, it said Thursday.

The Tokyo company is using its NEC Telecommunications (China) Co. Ltd. factory in Tianjin to assemble 3G base stations from parts supplied by NEC factories in Japan and local companies. The first base stations assembled at the plant have already been supplied to a European carrier customer but NEC's main reason for starting such work in China is to supply the local market when demand appears, said Akiko Shikimori, a spokeswoman for NEC in Tokyo.

China has yet to award any licenses to operate 3G networks and hasn't laid out a clear timetable. Industry watchers invariably expect licenses to be issued this year although many had previously bet on this happening last year.

Some believe China is waiting until a home-grown standard, called TD-SCDMA (Time Division Synchronous Code Division Multiple Access), will be mature enough to compete with the foreign W-CDMA and CDMA2000 standards. A report in June last year said the standard should be ready around the middle of 2005. Other observers note that the 2008 Olympic Games, which will take place in Beijing, will be used by China to showcase itself to the world and that a modern, 3G mobile telecommunications network will be an important addition to this effort.

Once China has issued licenses and carriers have decided which of the three technologies they will use, the situation will become much clearer and NEC will be able to firm up its plans, said Shikimori. Should carriers order W-CDMA base stations, the company will be in a position to begin assembling them and supplying them locally, she said. NEC has a development deal with Germany's Siemens AG, which is a backer of TD-SCDMA, and so the company may be able to supply TD-SCDMA equipment by working with Siemens, she said.

The exact production schedule and the location of factories to be used, including the possible use of outside contractors to assemble the units, will be decided later, she said.

NEC is not the only company casting a hopeful eye on the Chinese telecommunications market. Its huge current and potential size has led many foreign equipment and handset makers to establish local operations in the country in the last few years. Less than a week ago, Nortel Networks Inc. agreed to establish a 3G telecommunication equipment joint venture with China's Putian Corp.

NEC has moved its worldwide design center for 3G handsets, excluding those for the Japan market, to China and the company is currently aggressively pushing 2G handsets in the country.

Posted January 27, 2005 04:43 PM |