Germany's Siemens AG and China's Huawei Technologies formally kicked off a joint venture on Friday to develop products based on China's home-grown 3G (third generation) wireless standard TD-SCDMA.

The US$100 million joint venture is expected to give a major boost to TD-SCDMA, which is catching up with Europe-backed WCDMA and US-backed CDMA 2000.

The joint venture, TD Tech Ltd, is registered in Hong Kong with Siemens taking a 51 per cent stake while Huawei owns the remainder.

Karl-Christoph Caselitz, president of Mobile Networks at Siemens Communications Group, said TD-SCDMA "is ready for market."

"With TD Tech, we believe we will make TD-SCDMA a success in China," Caselitz said.

With the initial success in China, Siemens and Huawei "will convince operators in other countries to launch 3G networks based on the TD-SCDMA standard," he added.

Siemens and China's Datang are the major developers of TD-SCDMA technology.

Guo Ping, managing vice-president of Huawei, the largest telecoms equipment maker in China, said TD Tech Ltd plans to launch commercial products in the second or third quarter of this year.

Initially, TD Tech will focus on developing low-cost solutions to enhance the competitive edge of TD-SCDMA, he said.

The Chinese Government has asked developers of TD-SCDMA to get all products based on the standard ready for commercial use before the middle of this year.

The industry widely believes this will facilitate the 3G licensing process in China.

The government has yet to give operators the green light to start building up 3G networks in the country.

The immaturity of TD-SCDMA, compared to WCDMA and CDMA 2000, which have been put into commercial use in the global market, is a major reason for the delayed decision-making process.

TD-SCDMA has been lacking industry-wide support, but in recent months seems to be gaining increasing backing from major players.

Before the tie-up between Siemens and Huawei, France's Alcatel and Datang had formed a strategic alliance to develop TD-SCDMA with Alcatel investing 25 million euros (US$32 million).

Canada's Nortel Networks has agreed to form a 51-49 joint venture with China Putian Corp to develop TD-SCDMA and WCDMA products.

Guo, also the chairman of TD Tech, said Huawei has been following the TD-SCDMA technology since 1998 and has obtained several patents relating to TD-SCDMA.

Huawei has transferred its TD-SCDMA research and development (R&D) resources to the joint venture since the start of the preparations for the joint venture a year ago, he added.

He also revealed that TD Tech will launch a fully-owned R&D centre in Shanghai.

TD Tech, before its formal launch, participated in the TD-SCDMA project test, sponsored by the Chinese Government.

(China Daily March 19, 2005)