USITO Weekly 1/9/2009: China Grants 3G Licenses

China Grants 3G Licenses to Three Telecom Carriers

In the afternoon of January 7 Wednesday, MIIT Minister Li Yizhong convened an emergency meeting with the CEOs of China's three telecom carriers, in which he handed over 3G licenses to them. Four major Chinese official media agencies including Xinhua, were invited to the meeting. At 2:30pm, the media released the news that Chinese government officially announced to award the long-awaited 3G licenses to the three Chinese telecom carriers: China Mobile, the world's largest mobile carrier by subscriber base, got a license on China's homegrown TD-SCDMA standard; China Unicom won a WCDMA license, and China Telecom was granted a CDMA2000 license.

On Dec.31, 2008, the State Council, Chinese cabinet, approved MIIT to grant 3G licenses before the Chinese New Year (1/26/2009). The ministry acted promptly with two other competent authorities, NDRC (National Development & Reform Commission) and SASAC ( State-owned Assets Supervision and Admin Commission) to get the thing done within a week. The media applauded the licenses in their reports, saying it'll create more job opportunities in China and stimulate the economy. MIIT minister Li Yizhong estimated earlier that the 3G licenses may bring a total investment of up to RMB 200 billion within the year or so.

But the news sent the stock prices of the three carriers sliding the next day. China Mobile dropped 5.48% to HKD 78.45, China Unicom tumbled 10.6% to HKD 9.19 and China Telecom 5.02% to HKD 3.03. Analysts say the investors were selling shares because they see no more good news in recent terms. tech.sina.com.cn, scmp.com, 1/7/2009

USITO Notes: Though the industry is a bit excited to see the final solution, the general public looked rather calm and indifferent about the licenses, which should have happened much earlier if they had not been in China. It is no longer a topic worth of mass attention. Some adjacent countries like Japan have operated the service for ten years or so, and many Chinese mobile users now have a 3G phone smuggled from these countries, using it only for 2G voices.

Near term 3G plans of the carriers include: China Mobile now operates TD services in 10 cities, and plans to cover 38 cities in the middle of 2009. China Telecom has started spending its RMB 100 billion budget for 3G business, and China Unicom just concluded CDMA bidding in 342 cities. For the detailed plan and current status overview, members please click here for the industry map edited and translated by USITO.

The Chinese government will continue to formulate new policies to TD-SCDMA, such as adding TD-SCDMA technology to the government procurement catalog, and acknowledging it as a high -tech special project in the next 15 years to enjoy fund support and tax rebates. USITO will follow up with more details in our later publications. We also appreciate your feedback and suggestion for our action plan.

First Loongson Store Opens in Beijing

At 10am January 8th, the Loongson Product Store was opened in Beijing's Zhongguancun area, known as China's silicon valley. The store is located close to Loongson's developer, the Computing Technology Institute of China Academy of Science.

The Loongson products sold in the store includes: CPU, laptops and desktops, firewalls, developing tools, etc. It is reported the store is the third one of its kind in China, following pilot stores in Shanghai and Shenzhen. Sources from Loongson developer said more such stores will be opened in Tier-2 cities like Chengdu and Xi'an.

Loongson is the brand of China's homegrown computer chips, first launched in 2002 with 32-digit process at 266MHz. The most update version is Loongson 2E, introduced to market on 9/13/2006, which allegedly reaches the technical level of Intel's Pentium 4. people.com.cn, 1/8/2009

USITO Notes: Again this seems another fruit of China's "indigenous innovation" drive. In the 15-year Hi-Tech Plan and the 5-year S&T Plan, both issued in 2006, 16 special projects were outlined to be the priority for development of the next 5 and 15 years. The first one in the 16-project list, is about software and integrated circuits. In the recent two years, the Loongson developers have received much preferrential tax policies and special R&D fund of up to one RMB billion. USITO has recently worked with SIA (Semiconductor Industry Association) to jointly develop a report on the 16 Special Projects, which is scheduled for release within the next week or two.

Though a variety of Loongson products are now available commercially, most remains low-end comsumer products. Local media said the business was slack as the store saw few buyers though it received many visitors. Experts say the Loongson relies foreign semiconductor manufacturing facilities (by the European ST Microelectronics), to produce the chips. In the highly globalized value chain, no technology could be isolated in a closed circuit.

Chinese Official Media Commentary: 3G Licenses Issuance to Prop Up Economy

China 's issuance of 3G licenses is expected to help drive up the country's GDP by 0.5-1 percent. It will also likely drive social output up by nearly RMB 2,000 billion and stimulate 3G -related industrial chains. The country China is expectable to develop 500 million 3G users within five years and the fourth generation ( 4G ) mobile telecom technology will be exploited in the short run, with 2G and 3G technology being developed in the meantime.

An on-line survey at Sina.com on Wednesday found that 65 percent of the 130,000 respondents said they would choose 3G network service. Members please click here for the full text.

CCID: Review of China's Environmental Protection Industry 2008 and 2009 Outlook

In 2008, the total production value in the environmental protection industry topped RMB 800 billion, growing 15% y-o-y. It is forecasted at the end of the 11th 5-Year Plan period, the annual production value in the industry will reach RMB 1.1 trillion. China has introduced over 30 preferential taxation policies to promote clean production and consumption. Taxes will be further cut in 2009... Members please click here for the full report.