March 31, 2003 2:53 PM PST

Nokia, Agere chase China dreams

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Nokia and cell phone chip maker Agere Systems began separate efforts Monday to sell cell phones in China, which, outside of Africa, is among the last truly wide-open cell phone markets left in the world.

Nokia said Monday that it's created a new company in Beijing to build cell phones and wireless phone network equipment using the CDMA (code division multiple access) standard. The phones will be sold in China mainly, but could trickle into other areas of the Asian continent, according to Nokia.

"The new company represents one of the largest foreign-invested enterprises, as well as the largest manufacturer and exporter in the mobile telecommunications industry in China," Nokia said in a statement.

Chipmaker Agere Systems said it's beefing up its presence in China as well to sell more cell phones that use its products. Amoisonic Electronics, one of China's biggest cell phone makers, said Monday that it licensed Agere chips to create cell phones for an advanced type of wireless network called General Packet Radio Service (GPRS). Amoisonic is also licensing cell phone reference designs from Agere, according to Agere.

Nokia and Agere are among the biggest names yet to increase their focus on the Chinese cell phone market, which many consider virtually untapped. Nokia said that about a fifth of China's population--which, according to the United Nations, reached about 1.28 billion people in 2000--subscribes to some kind of cell phone service. The number of subscribers will likely quadruple to about 1 billion people in the next few years, according to Nokia. About half of all cell phones in China are made by Motorola, the market leader.

"This puts us close to markets that have been pretty much untapped from the standpoint of how many cell phones there are now (compared) to how many are expected in the next few years," said Tony Grewe, Agere Systems' director of strategic marketing.

But although there's wild excitement over the potential of a huge population that's starting to adopt somewhat of a Western style economy, analysts warn there is a downside to the Chinese market, including government controls over businesses and the small amount of revenue thus far to show for the billions invested over the years by Western countries.

 

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