By Zi Mu (China Daily)
Updated: 2008-01-30 09:17

TD Tech Ltd, a joint venture between Huawei Technologies and Nokia Siemens Networks (NSN), will offload its marketing, sales and service units to focus on research and development.

The venture is working on the Chinese 3G wireless technology TD-SCDMA, which will compete with Europe's WCDMA and the US standard CDMA 2000.

Under the agreement, TD Tech will develop radio access products, which Huawei and NSN will integrate into their TD-SCDMA solutions.

The two parent companies will take over marketing, sales and services previously done by TD Tech, Huawei and SNS said in a statement.

The arrangement underlines the growing desire of Huawei and SNS to stake out a larger share of equipment purchase orders brought by TD-SCDMA, which has seen increasing momentum in recent months.

TD Tech was a 51-49 joint venture formed by Siemens Communications Group and Huawei, the top Chinese telecom gear maker, in 2004. Last April, Siemens and Nokia formed NSN by combining their network businesses.

That cast a shadow on the fate of TD Tech as Nokia had previously said it would form a similar venture with Potevio, formerly known as China Putian Corp. The Nokia-Potevio venture is a rival for TD Tech as it also focuses on TD-SCDMA.

Insiders say SNS and Huawei have been in marathon talks over the fate of TD Tech.

With China Mobile increasingly likely to adopt TD-SCDMA, both want to take control of TD Tech.

Last year, China Mobile spent more than 20 billion yuan building TD-SCDMA trial networks in eight cities. TD Tech won about 13 percent of the major equipment orders.

"China Mobile is very likely to be mandated to eventually adopt TD-SCDMA," said Tao Xiongqiang, vice-president of Potevio and chairman of the Nokia-Potevio venture.

"The trial networks will eventually be expanded to other cities."

NSN and Huawei will compete in future TD-SCDMA bidding as they "will supply the same TD Tech products in the radio access part of the network", Huawei said.

"But we will differentiate in other areas based on our respective strengths," it said.

China Mobile had two-thirds of the 547 million mobile subscribers in China by December.

If China Mobile adopts TD-SCDMA, companies developing the technology could be the biggest winners in the 3G game.