China Mobile (CHL) is reportedly setting up a joint-venture with MediaTek Inc, Taiwan ’s leading handset chip manufacturer, to design and develop key components for its 3G handsets.
The Chinese wireless giant is expected to have 70% stake in the joint-venture with MediaTek holding the rest. MediaTek is currently the world’s seventh largest chip maker and has significant presence in the Chinese handset market.
Upon the partnership materializing, MediaTek will be a major chip supplier for China Mobile’s home-grown TD-SCDMA technology based 3G wireless handsets. This will facilitate China Mobile to secure customized chips for its proprietary 3G smartphone models (called Ophones). The companies have reportedly entered into an agreement in late August 2009 to jointly develop 3G TD-SCDMA technology.
China Mobile is increasingly focused on exploring opportunities for technology collaboration with world’s leading handset and chip manufacturers. The company has recently entered into a strategic collaboration with HTC, the world’s largest Windows Mobile-based handset maker, to design and develop Ophones. Initiatives are underway to collaborate with other leading Taiwanese vendors such as Chunghwa Telecom (CHT).
While preparing for the nationwide deployment of its 3G TD-SCDMA network, China Mobile is aggressively investing in developing Ophones to counter the emerging threat from Apple Inc’s (AAPL) iPhones.
Its peer China Unicom (CHU) has recently sealed a three-year agreement with Apple to exclusively market iPhones in mainland China in the fourth-quarter 2009. This has strengthened China Unicom’s competitive position in the domestic 3G wireless market.
Although China Mobile’s recent initiatives to boost the market adoption of its relatively less-mature TD-SCDMA network and Ophone handset offerings are encouraging, we believe the company will face challenges of adaptability and performance of its proprietary 3G technology given the faster network speeds offered by the competing internationally acclaimed technologies.
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