China Unicom to Build CDMA Networks

China Unicom said Monday it would build networks using current-generation CDMA technology, reversing its earlier position and reviving the fortunes of U.S. firm Qualcomm Inc. in the world’s second-largest wireless market.

The San Diego-based wireless-technology firm has been trying for years to persuade China to build networks using its narrow-band code division multiple access, or CDMA, standard.

The about-face by China’s second-largest mobile phone company, which in June ruled out using the standard, also will benefit foreign telecom equipment makers such as U.S.-based Lucent Technologies and South Korea’s Samsung Electronics.

Almost all of China’s 65 million mobile phone subscribers use the rival GSM, or global system for mobile communications, standard promoted by European firms.

As concrete evidence of China Unicom’s new commitment to CDMA, Chinese phone equipment maker ZTE Corp. and Qualcomm unveiled a CDMA prototype handset Monday.

Shares in Qualcomm rose $7.06, or 10%, to close at $77 on Nasdaq.

China Unicom publicly abandoned plans for narrow-band CDMA in June before the initial public offering of its Hong Kong-listed wing China Unicom Ltd.

That announcement helped crush Qualcomm’s stock price.

Its shares traded at $69.94 at the end of last week, far off its all-time high of almost $180 in January, even though Unicom held out the possibility of adopting future generations of Qualcomm’s CDMA.

But Unicom, under pressure from domestic equipment makers that invested several hundred million dollars in the standard, began hinting at a change of heart in September.

Qualcomm Chairman Irwin Jacobs met Chinese Premier Zhu Rongji and China Unicom Chairman Yang Xianzu in Beijing this month, and the announcement appeared to be the fruit of his high-level lobbying.

Officials said Unicom would expand a handful of trial CDMA networks it is scheduled to acquire, and build in other cities, subject to central government approval.