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Qualcomm in China pact
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February 1, 2000: 12:06 p.m. ET
Deal allows Chinese manufacturers to use Qualcomm's wireless technology
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NEW YORK (CNNfn) - Qualcomm Inc. finalized an agreement Tuesday with China United Telecommunications Corporation, which grants Chinese manufacturers the right to use Qualcomm's technology to make and sell wireless equipment.
The news sent Qualcomm's (QCOM: Research, Estimates) stock up 6.5 percent, gaining 8-1/4, to 135-1/4 in midday trading.
Under the agreement, Qualcomm will grant royalty-bearing licenses to China United Telecommunications, or China Unicom, to make and sell subscriber units and/or infrastructure equipment for wireless applications. Installation of Code Division Multiple Access equipment in China Unicom's network is expected to begin immediately.
Qualcomm, which owns most of the patents on the Code Division Multiple Access technology, is expected to reap huge profits from the China deal.
China Unicom is the country's No. 2 telephone company and hopes to use the technology to compete against state-run giant China Telecom's GSM networks.
China currently has more than 40 million mobile-phone subscribers, and the number is expected to hit 70 million later this year.
"This agreement enables China Unicom to move forward aggressively with plans to deploy a commercial CDMA network with an initial capacity of 10 million subscribers this year, and exponentially grow the network in the next few years," said Yang Xianzu, chairman and general manager of China
Unicom.
Foreign companies expected to compete for huge contracts for wireless technology in China include: Motorola (MOT: Research, Estimates), Lucent Technologies (LU: Research, Estimates), Canada's Nortel Networks, South Korea's Samsung and Sweden's Ericsson.
However, companies such as, Great Dragon, ZTE, Jinpeng Electronic Information Machine Co., and Datang Telecom are expected to stand shoulder-to-shoulder with the foreign firms in the bidding process.
Only two foreign companies have joint ventures licensed to make and sell CDMA equipment in China, Nortel and Motorola. Others have applied to license existing joint ventures.
Industry executives said Unicom was expected to start putting out tenders for CDMA contracts as soon as March. 
--Reuters contributed to this report
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