Rebecca Lim
12 Jun 2009

In an effort to stimulate the almost lifeless TD-SCDMA market, China Mobile has chosen a dozen handset-makers and three local chip firms to make phones for the struggling new business.

The mainland telecom giant has loosened its purse strings to entice consumers onto the network. China Mobile last month announced 600 million yuan ($88 million) in grants to help Motorola, Samsung, LG and local firms Yulong and Dopod make compelling 3G phones.

It is the first time that a Chinese telecom carrier had partnered directly with both handset manufacturers and chipmakers to co-develop mobile products, analysts said.

Significantly Nokia, which leads the China handset market, was not among the winners. Nokia China vice-president James C. Lin said the company would \'continue our cooperation\' with China Mobile in TD-SCDMA.

China Mobile will put 310 million yuan into high-end smartphones and 290 million yuan into low-priced entry-level devices.

The cash will go directly to eight teams of handset vendors and chip firms. Among the chip vendors, T3G, owned by ST Ericsson, won the lion\'s share of the smartphone funding, while Leadcore and Spreadtrum were the partners of choice for the low-end phone.

\'The plan will certainly encourage manufacturers to increase budgets and plans on TD handset research and development,\' said Tony Wang analyst from Beijing-based consulting firm Analysys International.

Wang says the industry believes that terminals are the weakest link in the TD-SCDMA industry chain. \'One of the required technologies, for example, is that TD phones need to be able to switch seamlessly from TD-SCDMA network to GSM network,\' he says.

Announcing the grants, China Mobile vice-president Lu Xiangdong admitted that \'whether or not the TD handsets can win the hearts of the consumers is a key issue for TD-SCDMA\'s success.\'

Lu said that by the end of the year China Mobile planned to develop 36 high-end phones and ten sub-1,000 yuan ($145) entry-level handsets.

International suppliers have become more proactive on the development of TD.

\'Last year, international suppliers were in wait-and-see mode over the development of TD. But China Mobile\'s large customer base, its executive power and efficiency and its past relationship with most international manufacturers on GSM business have let manufacturers to begin working on TD phones,\' Wang said.

Samsung, for example, will issue seven TD phones as well as a series of low-price 3G phones in 2009.

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