Spreadtrum Takes Smart Gamble on China 3G
Having survived an attack by short-sellers, cellphone chip designer Spreadtrum (Nasdaq: SPRD) is broadening its smart move into smartphones, this time by taking a big gamble on TD-SCDMA, the homegrown third-generation (3G) mobile standard being developed and promoted by China Mobile (HKEx: 941; NYSE: CHL). Many will recall that this company made headlines earlier this year when short sellers attacked it over questions about its inventory — questions the company later successfully fended off. (previous post) In the meantime, the company said it was placing its bets for the future on smartphones (previous post), which have shown huge growth potential as celllphones become more and more like wireless computing devices. In the latest wrinkle, the company has disclosed that it now controls more than half of the market for chipsets used in smartphones that run on TD-SCDMA, the homegrown Chinese 3G wireless standard being used by China Mobile. (company announcement) If you had asked me 3 months ago what I thought about this, I would have said that Spreadtrum was wasting its time and money, as China Mobile was showing little interest in promoting its 3G service, which many considered unreliable due to the untested nature of the technology. But in just the last two months, China Mobile has suddenly shown a new interest in promoting the service, making Spreadtrum’s bet suddenly look much better. Its investment in TD-SCDMA will also inevitably give it a headstart in developing chipsets for the standard’s 4G successor, TD-LTE, which China Mobile is actively developing and could launch commercially as soon as next year. Many carriers outside China are also taking a serious look at TD-LTE, which could further boost the market for this standard. Of course, other chipset makers will probably see what’s happening and jump on the TD bandwagon, but Spreadtrum’s early entry into this space should give it a clear advantage for at least the next 1-2 years.
Bottom line: Spreadtrum’s aggressive push into TD-SCDMA looks like a smart move in light of China Mobile’s recent promotion of its 3G service.
Related postings 相关文章:
◙ China Mobile Nears iPhone Deal, Continues 4G Press 中移动iPhone协议近尾声 加紧4G攻势
◙ Spreadtrum On Cusp of Putting Out Short-Seller Fire 展讯力抗卖空方
◙ Spreadtrum Steps Up Smart Drive 展讯通信向智能手机市场迈出精明一步
