China snubs US with 3G phone 'wonderchip'

Truce over

By Andrew Orlowski in San Francisco, 11th May 2004

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When China signed an agreement with the US Trade Department to drop two important home-grown wireless technologies last month, cynics wondered how long the agreement would last.

Now we have an answer: about two weeks. The PRC had bowed to intense lobbying pressure and agreed not to develop its WAPI 802.11 encryption, and a 3G technology called TD-SCDMA: a rival to the CDMA 2000 systems developed by Qualcomm and W-CDMA, which forms the basis of all European and most of Asia's 3G networks.

A statement issued by the US Department of Commerce said that China had agreed to "support technology neutrality with respect to the adoption of 3G," implying that China's mobile networks would be free to choose between W-CDMA and CDMA 2000 and that TD-SCDMA which costs them less, had been kicked into the long grass.

But last week the Xinhuanet news agency proudly heralded the arrival of a new processor for mobile phones from Spreadtrum, which claims to be a "breakthrough" single processor integrating analog baseband and power management as well as radio onto the silicon. The chip has the backing of the Chinese IT and science ministries.

"The development of the new chip will help push forward the industrialization of the TD-SCDMA, an original communications standard of China for third-generation mobile telecommunication, in the country," we learn from Jiang Shoulei, head of the Shanghai Integrated Circuit Industry Association. The report points out that China spent $10bn to import phone chips last year.

US manufacturers have complained for years about Chinese protectionism, but "protectionism" is something that only other countries do, never one's own. The US Commerce Department was protecting its own manufacturers from home-grown Chinese technologies which, it could be argued, were cheaper and more attractive, and benefited the national interest: $10bn spent internally, rather than in Stockholm or San Diego represents a significant boost to the Chinese economy.

Ironically, Spreadtrum's breakthrough should benefit both. The fabless design company was started by Chinese entrepreneurs in 2001 with headquarters in Sunnyvale, California: its second product, a TD-SCDMA chipset is due to appear in phones by the end of the year. ®