TD-SCDMA: US$3B into the network (by the end of 2012) and 6 million phones procured (just in October)

Updates: China government not expected to issue TD-LTE operating license for the time being [Jan 16, 2012]

While China Mobile has been actively promoting TD-LTE, the China government is not expected to issue a TD-LTE operating license to China Mobile for the time being, according to industry sources.

China Mobile finished initial TD-LTE trials in seven selected cities in China around the end of 2011 and has proposed a second-round of trials, but the China government has not yet approved the plans, signaling the government’s attitude to slow down promotion of TD-LTE in China, the sources indicated.

This is because 3G mobile communication services are taking off in the China market and therefore the government does not want to issue a TD-LTE operating license out of consideration for China Telecom and China Unicom, the sources said.

– China Outstrips U.S. in Smartphone Market [Nov 23, 2011]

Deliveries of smart phones to operators and retailers in China grew 58% in the third quarter from the previous quarter to 24 million units. That surpassed 23 million units delivered to the U.S. market, down 7% from the previous quarter …

Nokia Corp. had the largest share of China’s smartphone market in the third quarter, with 29%. … Samsung Electronics Co. Ltd. is chasing hard with 18% of the Chinese market …

Strategy Analytics estimates that 57% of the world’s handsets were manufactured in China in 2010. … two of Nokia’s eight production facilities are based in China and the company said China is also one of its bigger suppliers of mobile handset components. …

End of updates

China Mobile Begins New Round of TD-SCDMA Procurement [Oct 12, 2011]

China Mobile (NYSE: CHL; 0941.HK) recently began its fifth-round TD-SCDMA equipment tender. China Mobile will further expand its TD-SCDMA 3G network by deploying base stations in county-level cities and other key urban areas, with total base stations expected to reach approximately 300,000 by the end of 2012. Mobile network equipment vendors have received tender orders and will place bids this week.

China market: China Mobile to expand TD-SCDMA network, says report [Oct 14, 2011]

China Mobile will invest an estimated CNY19 billion (US$2.97 billion) to expand its TD-SCDMA network, adding 53,000 base stations around China, according to China-based media DoNews.

China Mobile has established about 210,000 TD-SCDMA base stations around China, the report indicated.

The second-round value was not disclosed only the following became known (China Mobile Releases TD-SCDMA Tender Results [Nov 17, 2011])

The second round TD-SCDMA tender, with a scale 1.53 times that of the first round, involved 23,000 wireless base stations in 28 Chinese cities.

The third-round had a value of RMB8.6 billion ($1.26 billion), see: China Mobile releases 3rd-round TD-SCDMA bidding results [May 11, 2009]

According to China Mobile to Release Results of Phase Four of TD-SCDMA Tender [TD Forum, July 1, 2011]

China Mobile is expected to procure around 102,000 base stations for the TD-SCDMA network in 101 cities, close to the total number in the previous projects.

In the previous three TD-SCDMA network construction projects, China Mobile set up 108,000 base stations in total, with a combined investment of over CNY90 billion (USD13.16 billion).

According to Winners of New TD-SCDMA Bid [June 9, 2010]:

CMC has spent about 103 billion yuan ($15 billion) on three phases of TD-SCDMA construction so far. Insiders estimate the new round will cost about 90 billion yuan ($13 billion) based on the number of BTSs that will be 2.5 times over the previous phase. Actual spending may be different because more or less BTSs may be needed as project goes along. Previously, CMC announced a phase-down in capex to reach about 80 billion yuan ($12 billon) by 2012 from 123 billion yuan ($18 billion) in 2010, a reduction of 35% in three years.

CMC’s goal is, after the fourth phase, TD-SCDMA coverage will be available in all major cities with improved signal quality and low drop ratio. However, user experience can be very different. Even in cities where the service is available people still complain about shaky connection and jagged video especially in moving vehicles or traveling toward the edge of city. CMC officials say an objective of fourth phase is to “replenish” blind spots in existing networks missed from previous phase, a weakness that has put CMC behind its rivals in quality of service.

If everything goes smoothly, construction is expected to begin in August or September.

According to Chinese vendors take 70% of [4th round] TD tender: report [July 28, 2010]:

China Mobile has built out its network in 238 cities over the last two years. It spent 129 billion yuan ($19b) on its 2G and 3G networks in 2009-10 and this year expects to invest 123 billion yuan, of which 106 billion will go to its combined 2G/3G rollout.

CMCC to Invest CNY 19bn to Construct TD-SCDMA Network [Oct 13, 2011]

BEIJING, Oct 13, 2011 (SinoCast Daily Business Beat via COMTEX) — The insider disclosed on October that CMCC (China Mobile Communications Corporation) is to invest CNY 19 billion to construct TD-SCDMA network in different counties and important villages and towns in China.

Meanwhile, the existing TD network topology in cities will be perfected. It is reported that CMCC plans to construct 53,000 new TD base stations. Through the first four phases of construction and continuous blind compensation, CMCC has constructed 210,000 base stations by the beginning of this year.

The invitation for the bidding started from the later half of September and has entered into the crucial bidding returning stage at present. According to the requirements of CMCC, manufacturers have to return the tenders today.

It is specially required by CMCC that the TD-SCDMA network to be newly constructed should be smoothly upgraded to TD-LTE network with the same frequency, namely, the TD-SCDMA network should be upgraded and evolved to the future LTE-frequency network in terms of wireless equipment, core network equipment, transmission and supporting facility at current frequency.

Source: http://www.sina.com.cn (October 13, 2011)

The current subscriber data (from the corresponding operators, till August 2011) is indeed showing that China Mobile TD-SCDMA needs a significant boost in the subscriber numbers:

China Mobile had 627.628 million mobile subscribers as of August 31, 2011, and 40.318 million 3G subscribers, that is only 6.4% of the overall.

China Unicom meanwhile had 186.1 million mobile subscribers as of August 31, 2011, and 27.868 million 3G subscribers, that is as much as 14.97% of the overall.

China Mobile to purchase 6 million TD-SCDMA mobile phones [Oct 9, 2011]

According to a notice issued to all mobile phone manufacturers , China Mobile has launched a new round of TD-SCDMA mobile phone purchases before National Day [Oct 1], and plans to purchase six million universal TD mobile phones.

All procurement of universal TD handset

A relevant mobile phone manufacturer said this purchase is called “universal G3 mobile phone” centralized procurement project, the procurement of universal G3 mobile phone estimates about 6 million, including 3.6 million low-end TV terminals , 2.4 million mid-end TV terminals.

The mobile phone manufacturers received invitation to tender on the September 29th 16:00 to 18:00 and September 30 9:00-18:00 .

The TD phones purchases maybe related to the fourth round TD-SCDMA network Construction. The construction is currently underway and will be extended to almost all cities of the country. In this case, the demand for TD mobile phones increased.

Chipmakers are ready to support that:

First real chances for Marvell on the tablet and smartphone fronts [Aug 21 – Sept 25, 2011]
especially because: Kinoma is now the marvellous software owned by Marvell  [Feb 15, 2011]

Spreadtrum is the other big player in that:

China Mobile To Adjust Subsidies For TD-SCDMA Terminals [Oct 17, 2011]

China Mobile (0941.HK) plans to adjust the subsidies given to buyers of its TD-SCDMA terminals in order to expand the pool of its 3G users following several unsuccessful attempts to introduce Apple Inc’s iPhone, reports yicai.com.

Li Liyou, the C.E.O. of a TD-SCDMA chip maker [chairman of Spreadtrum], said the largest mobile operator in China has cut the procurement of TD-SCDMA terminals by two-thirds, and buyers of TD-SCDMA phones which are included under the operator’s list of TD-SCDMA phones will now be able to enjoy fee rebates.

According to Li, 2012 will be the year in which GSM mobile phones are replaced by TD-SCDMA phones as the difference in production cost per phone is reduced to less than $2, and TD-SCDMA smartphones currently cost about $60 to make, and can be sold to customers at 700 yuan each.

Procurement by China Mobile currently accounts for less than 30 percent of total TD-SCDMA terminal sales volume, said Gao Guiming, vice president of Changhong Communication and Digital Information.

Spreadtrum Meets Milestone for China Mobile TD-SCDMA Grant [Sept 30, 2011]

Spreadtrum Communications, Inc. (NASDAQ: SPRD; “Spreadtrum” or the “Company”), a leading fabless semiconductor provider in China with advanced technology in both 2G and 3G wireless communications standards, today announced that in 3Q 2011 it has met the last major milestone of a TD-SCDMA research and development grant awarded by China Mobile to the Company in 2009.  This marks successful completion of the project and will enable the Company to recognize more than US$8 million in research and development grants as an offset to operating expenses in the third quarter of 2011, including subsidies recognized from both the China Mobile and other government projects. Spreadtrum’s TD-SCDMA customers include more than 30 global and domestic tier-1 manufacturers and design houses who have introduced more than 72 feature phone and smartphone models in 2011 using Spreadtrum’s baseband solutions.

Spreadtrum now commands more than 50% market share of TD-SCDMA shipment volumes.  Dr. Leo Li, Spreadtrum’s president and CEO commented, “We are the clear leader in the feature phone and fixed wireless segments of the TD-SCDMA market, which account for the majority of industry shipments so far this year. Our 40nm-based single-chips with TD-SCDMA/EDGE/GPRS/GSM, multi-media and power management features have enabled customers building handsets on our platform to achieve breakthrough standby and talk times, at a retail price point that is attractive to 3G handset buyers.  We further expect to expand our footprint in the smartphone segment following the launch of our low-cost single-chip smartphone product.”

Dr. Li added, “In addition to today’s news and in response to recent shareholder inquiries, we would like to provide additional clarification on our corporate structure.  Our primary operations in China are conducted through a wholly foreign owned enterprise (WFOE), distinct from the variable interest entity (VIE) structures that are common in the China Internet sector and that have been the subject of recent press speculation with regards to possible PRC or US government review.  There is no active investigation that we are aware of by either the China government or the US Department of Justice of our corporate structure or accounting practices, which adhere to conservative interpretation of US GAAP.”

Spreadtrum Counts on Taiwan’s Chipmakers to Win 3G Battle In China [Oct 3, 2011]

Spreadtrum Communications Inc. of mainland China has contracted Taiwan Semiconductor Manufacturing Co. (TSMC) and Advanced Semiconductor Engineering Inc. (ASE) to make its baseband chips designed on 40nm process rule amid white-hot competition among the mainland’s 3G chip vendors.

Spreadtrum has commanded a 56% share of the mainland market for the wireless chips specifically designed for mobile phones that are built on the TD-SCDMA (time-division synchronous code division multiple access) 3G format, which is spearheaded by China Mobile Co., Ltd.

The chip vendor recently completed a 40nm chip design, which it claimed consumes only two thirds of the electrical power that a 65nm chip does and brings down the cost of TD-SCDMA phone close to that of the 2.7G EDGE handset.

Spreadtrum has designated TSMC to make the chips and ASE to package the chips for it in conjunction with China Mobile’s plan to promote TD-SCDMA handsets during the 2012 Chinese New Year holidays, which will begin on Jan. 23.

The vendor will begin pilot production of its chips for the 4G TD-LTE (time division long term evolution) phones at the end of this year also at TSMC and ASE.

Industry executives expect Spreadtrum to retain the championship in the mainland’s market for the TD-based chips given that it has shied away competition against Taiwan’s MedaTek Inc. for a slice on WCDMA (wideband code division multiple access) market, where competition is keener among chip vendors than on TD-SCDMA market. In addition to MediaTek, competitors in the mainland’s WCDMA market include MStar Semiconductor Inc., Qualcomm Inc. and ST-Ericsson Inc.

The mainland now has around 100 million subscribers to 3G telecommunications service, which is mostly provided by China Telecom on CDMA2000 network, China Unicom on WCDMA network and China Mobile on TD-SCDMA network.