Intel will stop selling its 802.11 WLAN products in the People's Republic of China because it refuses to comply with the country's home-grown proprietary encryption technology.

Beijing has mandated that from June, equipment must conform to its own WAPI, or WLAN Authentication and Privacy Infrastructure standard, GB15629.11-2003. The move has been variously interpreted as a measure to protect China's own emerging technology manufacturers and as a national security ploy. It might not cost the US chip giant very much - sober estimates reckon the Chinese WLAN market is worth just $24m right now - but it is the latest installment in which the upcoming superpower is setting the terms of engagement.

WLAN compliance has divided US exporters. Texas Instruments, Cisco's Linksys and Atheros say they're willing to comply with WAPI, while Broadcom, and now Intel, would rather withdraw from the market.

China ensures that foreign capital stays in the country and demands joint ventures, with technology investors, in which the latter are encouraged to share their IP. With a long engineering tradition and a high investment in education, the PRC has little reason to believe that it needs to be dependent on expensive foreign technology. China is developing its own third generation mobile phone technology, TD-SCDMA, its own DSPs and its own PC microprocessor, Godson, and intends to deploy Linux widely.

Spooks' concerns have bedevilled wireless trade between the two countries before. Beijing was wary of adopting Qualcomm's CDMA technology which would have left its mobile phone infrastructure at the mercy of the US Department of Defense. CDMA uses the DOD-controlled satellite network to synchronize its base stations. Neither W-CDMA nor China's home grown TD-SCDMA have this disadvantage. ®

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