IBM to Supply Processors to China’s Huawei Technologies

IBM Corp., the world’s largest computer maker, said Sunday that it will be the prime supplier of advanced chips and components to the main builder of China’s Internet system.

IBM agreed with Huawei Technologies Co. to supply a variety of sophisticated processors and chips for Huawei’s routers and switches, the key building blocks for networked computers that form the Internet. Terms weren’t disclosed.

The multiyear agreement could enhance IBM’s chances of selling a broader range of products, including server computers, in China as the nation increasingly uses the Internet.

“We view Huawei as a very significant customer, and this establishes a stronghold for our technology in the Asia-Pacific region,” said Steve Longoria, IBM’s director of marketing for network processing.

In 2002, the business from Huawei will add roughly 10% to Armonk, N.Y.-based IBM’s total revenue from the sale of network processing equipment, he said. Huawei is based in Shenzhen, in southern China.

Among the components IBM will supply to Huawei are network processors, which are chips that route packets of data, and other customized chips linked to network software.

Huawei, founded in 1988, is China’s primary maker of routers and optical data-transmission systems used by telecommunications companies. The company said it had $1.3 billion in first-half 2000 revenue and contracts in Russia, eastern Europe, Africa and Asia. It has cooperative arrangements with such U.S.-based telecommunications-equipment makers as Texas Instruments Inc., Lucent Technologies Inc. and Motorola Inc.

IBM announced a joint venture last month with China Great Wall Shenzhen Co. to make advanced printed circuit-board assemblies for Finland’s Nokia at a factory near Beijing.

IBM shares, up 15% this year, rose $2.38 to close at $123.88 on Friday on the New York Stock Exchange.