China's top telecoms equipment maker Huawei Technologies and US wireless giant Motorola have entered into an alliance to jointly develop next generation communications technologies.

 

The tie-up, underlining an increasing consolidation of major telecoms equipment companies, will help Huawei and Motorola "develop an enhanced and extensive portfolio of infrastructure equipment for customers worldwide," the two firms said in a statement.

 

The new equipment will be based on the UMTS (universal mobile telecommunications system) and HSPA (high speed packet access) systems, faster versions of the 2G (second generation) GSM (global system for mobile communications) mobile technology, which currently dominates the world's mobile telecoms market.

 

As part of the collaboration, Huawei and Motorola will establish a joint research and development (R&D) center in Shanghai.

 

A Huawei spokesman said the two firms are still working on final details about the center, and could not give a figure for the investment involved.

 

"The development team will be internationally distributed to capture global operator requirements," he said.

 

Products developed at the R&D center will be marketed and sold by both companies under their own brands.

 

The tie-up is apparently designed to help Motorola lower costs to compete more effectively with its global rivals Ericsson, Nokia, Siemens, Alcatel and Lucent.

 

"The products will be manufactured by Huawei," the Huawei spokesman said.

 

"This feature-rich portfolio will offer mobile operators worldwide a compelling choice of UMTS solutions, including one of the broadest ranges of radio access, circuit and packet core products, and HSPA over a wide range of new frequency bands."

 

In the past months major global telecoms players have been on a merger and acquisition spree.

 

Last October Ericsson agreed to buy the major assets of Britain's Marconi for US$2.1 billion.

 

Alcatel in April announced it would acquire Lucent in a US$13.4 billion stock swap.

 

And Nokia and Siemens in June announced the merger of their network equipment businesses with estimated annual sales of 15.8 billion euros (US$20 billion).

 

The Nokia-Siemens deal will save the two firms 1.5 billion euros (US$1.9 billion) every year.

 

The slew of mergers and acquisitions are partly designed to fight off competition from Huawei and its domestic peer ZTE Corp, which are emerging as telecoms heavyweights, competing through a combination of low prices and high-quality, analysts said.

 

Speculation has been rife that other industry players such as Canada's Nortel Networks, Motorola, Huawei and ZTE might also be forced to consolidate.

 

It's unclear whether the Huawei-Motorola deal will lead to wider collaboration between the two companies. But Greg Brown, president of Motorola's Networks & Enterprise division said the deal "enhances our technological innovation while also creating cost savings for our business."

 

(China Daily July 27, 2006)