Apple Inc's iPhone may debut in China sooner than expected after the US tech firm yesterday was reported to have started manufacturing the Chinese edition of its popular smart phone.

One of China's largest portal websites Neteast.com yesterday reported that Foxconn Technology Group, Apple's manufacturing partner, has started producing the iPhone specially designed for the Chinese market.

The product, code-named "90" by Foxconn, eliminates the WiFi function as earlier reported but kept the support of 3G network, Bluetooth and other popular features, the report said, citing anonymous sources in Foxconn.

It also said the negotiations between Apple and China Unicom is nearly over and the two firms will announce the details in the next few weeks.

Although both Foxconn and Apple yesterday refused to comment on the report, there are signs that Apple may be just inches away from wooing the world's largest mobile population, where cellphone users reached 687 million by May, according to government figures.

In April, Apple COO Tim Cook said iPhone "would like to be in China within the next year". On Monday, the company was also reported to have applied for the network access license in China, which means that Apple could begin offering iPhone within six months, according to research firm Wedge Partners.

Yi Difei, spokesman of China Unicom, said yesterday that the company is still in talks with Apple on introducing the iPhone.

Apple had been in talks with China Mobile since it released the iPhone in 2007 but later turned to China Unicom, which adopted the third generation (3G) technology that Apple's iPhone3G and iPhone 3GS supports.

According to experts, China's ban on the WiFi function in cellphones, the amount of handset subsidy, and Apple's insistence on running its App Store in China are the major obstacles that are keeping iPhone out of China.

But it seems like that both parties are now willing to make serious compromises to speed up the process.

Chinese telecom operators have been actively establishing 3G networks to attract new users after the government granted licenses early this year. According to reports, China Unicom had 139.5 million mobile phone users by May, compared with 488 million and 36.91 million for China Mobile and China Telecom.

China Unicom hopes that by introducing iPhone, the company could increase its appeal to high-end cellphone users in China and also challenge China Mobile's top perch.

Wang Yuquan, senior consultant, Frost & Sullivan, however feels that iPhones may not pose a threat for China Mobile, as the barring of the WiFi function will keep off many prospective users.

"Despite Apple's great popularity, the WiFi-disabled iPhone will significantly reduce its appeal to consumers, who have to spend a huge amount of money in traffic costs for services like online video and Internet surfing," he said.

The Chinese telecom regulations banned the use of WiFi functions in mobile phones due to fears over IP-telephony and the support for WAPI, a domestic rival for WiFi.

Wang said most of the high-end users in China are still those that mostly use voice services and do not have great interest in 3G services.

According to OVUM, a British telecom consulting firm, there are currently about 1 million unlocked iPhones in China, most of which are smuggled from aboard.

(China Daily July 16, 2009)