A week in tech, April 16-22

A roundup of the latest tech news.

Korea Telecom Freetel has purchased 300,000 mobile phones from China for shipment this year. KTF, which is controlled by KT Group, mainly purchases WCDMA mobile phones, which are provided by very few Chinese manufacturers. For 2008, KTF has procured a total of 8 million mobile phones, of which 7 million are WCDMA mobile phones. For 2009, the company plans to purchase 8 million mobile phones, all of which will be WCDMA. Samsung, LG, Pantech and KTFT, a KTF subsidiary, are KTF's main mobile phone suppliers. Samsung is the largest vendor, accounting for 45.4% of shipments to KTF in 2006.

Hynix Semiconductor Inc. does not see further drops or rises in prices of computer memory chips this quarter and expects improvement in the market in the second half. Makers of dynamic random access memory (DRAM) chips, used mainly in personal computers, have seen their profitability savaged by a severe glut and slower PC demand, which has driven down the price of some key chips by more than 90% since early 2007. Underscoring the chip makers' difficulties, Japanese rival Elpida Memory warned of an operating loss nearly twice as big as the market consensus due to the DRAM tailspin.

A special prosecutor levelled tax evasion and breach of trust charges against the leader of Samsung Group but took steps not to upset the fundamental control and operations of South Korea's largest conglomerate. The special prosecutor said Lee Kun-hee, Samsung's chairman, wouldn't be arrested because that would cause enormous disruptions to the 59 Samsung companies, which includes Samsung Electronics. Nine other Samsung executives were indicted on similar charges as the special prosecutor concluded an investigation that began in early January. The investigation was ordered by South Korea's National Assembly after a former Samsung attorney stepped forward last year with allegations of bribery, false accounting and other wrongdoings.


Google aims to become a market leader in China's Internet search market in about five years and is also exploring investments in Chinese companies that focus on social networking and mobile Internet as part of its strategy to expand in China. Google is gaining market share and has overtaken Alibaba Group's Yahoo China but continues to lag behind Baidu.com. Google, which is based in Mountain View, California, accounted for 26% of China's Internet-search revenue in the fourth quarter, up from 17% a year earlier. Market leader Baidu.com's share of the market rose to 60% from 58%.

Market talk suggests that Baidu.com plans to enter into the operation of online games, and will soon launch several game products. The search engine reportedly will make full use of its platform and online game channel to co-manage online game services with a NASDAQ-listed Chinese online game company. BaiduÆs participation is expected to have an impact on the entire online game market as it will be supported by the companyÆs high market coverage rate, rich resources and advanced promotion competence. ChinaÆs online game market amounts to Rmb2.8 billion ($2 billion) and is expected to expand more than 20% annually in the coming four to five years to hit Rmb40.1 billion in 2011.

Cisco Systems has appointed Jim Sherriff, its senior vice president of global operations, to a newly created position as chairman of Cisco China. In his new role, Sherriff is responsible for implementing the company's China strategy, which includes research and development, education, procurement, investment and training. Sherriff and Randy Pond, executive VP of global operations, will co-chair the Cisco China Strategy Board. Other board members include Owen Chan, president of Cisco Asia Pacific, and Thomas Lam, president of Cisco China.

Dell, the world's second largest personal computer manufacturer, will enter into a sales partnership with Suning Appliance Co, China's second-largest retailer of home electronics, in a bid to boost earnings outside the US amid a domestic economic recession. The new partnership is in addition to a previous exclusive tie-up with Gome Electrical Appliances. Dell will sell laptops and desktops through Suning stores and, according to global operating manager Michael Tatelman, it also plans to team up with several small-sized Chinese retail chains in the short term to reach a fleet of 12,000 stores in the world's second-largest PC market. Dell began selling products through Gome stores last year and is planning to more than double (to 900) the number of Gome stores carrying its products this year. Dell aims to generate more than 50% of its sales from outside the US.

Walt Mayo, global vice president of Dell and general manager of its consumption business department in the Asia Pacific region, confirmed that the company will also join hands with Hisap High Technology Corporation to enter the retail market. Hisap will introduce a series of high-quality Dell notebooks and desktops with higher price-to-performance ratio and lower prices during the May Day holiday period.

Mobile/ Wireless
GrenTech CorporationÆs net profit tumbled 44.6% year-on-year to Rmb82.5 million ($11.3 million) in 2007. The annual revenue increased 17.6% to Rmb979.3 million. A 39.9% increase in costs was behind the drop in net profit, while large sales volume were countered by a decrease in average selling prices for wireless coverage products. Contracts with China Mobile and China Unicom increased the revenue significantly due to the operators' wireless coverage expansion. China Telecom and China Netcom, on the other hand, reduced their PHS (personal handyphone system) network coverage expenditures, which had a negative impact on the GrenTech's 2007 revenues.

Chinese handset manufacturers Gionee and K-Touch unveiled several analogue TV mobile phones at a conference in Shenzhen, while an analyst from Sino Market Research said the analogue TV function will become a major selling point for mobile phones in China this year. Gionee plans to launch several more models of analogue TV mobiles this year, including the A11, A12 and A16. They will all have large-sized screens and the A16 will have a stylish design to target women users. The A10, powered by Telegent Systems' single-chip mobile TV receiver, will be sold through Acorn International's TV shopping platform at the end of this month at Rmb1,680 ($240.30).

Mobile phone users in Shenzhen have urged the operators of domestic (China's homegrown 3G technology) networks to connect with Hong Kong's 3G network as soon as possible. The difference in 3G systems means Hong Kong 3G mobile phones cannot be used in Shenzhen and vice versa. Hong Kong and Shenzhen users expect the two networks to connect soon in order to satisfy daily commuter demand. Although China Mobile has launched TD-SCDMA business in Shenzhen on a trial basis, most users are not eager to buy 3G mobile phones due to instable technology and high fees.

Chinese handset manufacturer Beijing Tianyu Communication Equipment, also known as K-Touch, shipped 14 million mobile phones to distributors last year. In addition to selling mobile phones in China, K-Touch also exports its products to countries in Southeast Asia, South Asia, Eastern Europe and Central Europe through partnerships with distributors in those countries. Overseas markets accounted for approximately 10% of K-Touch's revenues in 2007 and the company aims to increase this to 20% this year. K-Touch has a government license for the production of GSM and CDMA mobile phones and has launched mobile phones under its own K-Touch brand.

Mainland set-top box manufacturers are scrambling to deliver advanced products domestically, as demand for higher-performance digital television broadcast services heats up before the Beijing Olympic Games. The country's rapid conversion from analogue to digital broadcasting has led set-top-box makers to increase production to meet the requirements of service providers across the mainland. The mainland's cable television broadcasters had made implementation of high-end digital cable set-top boxes a priority in anticipation of existing and new domestic subscribers watching the games this August on digital television sets. Beijing-based CCID Consulting estimates there were 27 million new digital mainland television users last year, of whom 12 million were cable digital television subscribers.

Media, Entertainment and Gaming
Giant Interactive has launched its much-hyped new game Giant Online. The success of the offering will be critical to the future of the company. The game took 21 months to develop with a team of close to 200 developers. So far, $5 million has been spent, said Eric He, GiantÆs chief financial officer, and a further $5 million to $10 million will be invested in the next five years to enhance the game. Giant shares surged 22% in the two trading days after the game was launched on March 28. The game is free to play, but users have to pay to take shortcuts to gain skills and experience. Essentially, players pay to cheat. That helped Giant boast a net margin of 74% last year.

Chinese online game developer Sohu.com started an open beta test of Tian Long Ba Bu (TLBB) in Hong Kong and Taiwan on April 16. Some Taiwan players have participated in a previous closed beta test of the martial art massively multiplayer online roll-playing game (MMORPG). TLBB was launched as a proprietary online game by Sohu in May 2007. Since November 1, 2007, when the second expansion pack of the game was released, its peak concurrent players have topped 500,000, surging 20% from earlier. Online market research expert iResearch points out that martial art is popular in Taiwan and Hong Kong, so TLBB is very likely to be warmly welcomed in the area.

Ninetowns Internet Technology expects to record a non-cash impairment charge of up to Rmb197 million ($42 million) against its long-lived assets and goodwill. Of this impairment, a significant amount is expected to be charged against goodwill that was derived from the acquisition of minority interests in the company's business-to-government ("B2G") business during its pre-IPO restructuring in June 2004.

China UnicomÆs subscriber base stood at 167 million at the end of March, up 1.63 million from end-February. Subscribers for its global system for mobile communications (GSM) service rose by 1.32 million over the month to 124 million. Subscribers for its code division multiple access (CDMA) service totalled 42.8 million at the end of March, up 301,000 over the previous month.

ZTE Corporation of China, an advanced telecommunication systems and equipment company, is actively promoting its WiMAX products in both developed and emerging markets. The company's WiMAX product line global marketing director Yuan Wei predicts WiMAX revenue will be close to those of CDMA products in three years. WiMAX product application readiness is four to five years ahead of those of Long Term Evolution so many WiMAX end-products will be ready for commercial use in 2009. Wei says the market currently does not understand WiMAX very well, but the global WiMAX market is expected to reach $10 billion in 2009, of which equipment will account for $4 billion. By 2012, the market value is expected to reach $32 billion and the equipment value $16 billion.

China Mobile chairman and CEO Wang Jianzhou says Apple Computer is interested in introducing its iPhone handset to the China market, but further discussion is needed on cooperation details such as operation mode. With regard to China Mobile's foreign expansion, the company prefers to become a minority equity shareholder in international mobile operators to gain related experience. Although taking over another company by way of shareholding could lead to fast expansion, China Mobile prefers a steady pace, he says. The takeover cost of well-known global mobile communication operators may also be too high for the company.


ò Chunghwa Telecom Co. Ltd. is seeking authorization from Microsoft Corp. for the MSTV platform to be applied to Chunghwa's multimedia-on-demand (MOD) services, the Commercial Times reported, citing market talks. The license fee could be around several billion Taiwan dollars based on a rule-of-thumb 40-50 USD per MOD subscriber. Taking into account 1.2-1.5 million set-top boxes required for the service and the licensing, the MSTV project could require total investment of NT$10 billion (US$330 million) in the next three years.

ò Acer and Quanta Computer recently joined telecom providers to form an alliance christened Consortium of Mobile Broadband to promote WiMAX technology. The telecom providers include Global Mobile Corp., Vestar Cable TV Network Co., Ltd., Tatung InfoComm Co., Ltd., and First International Telecom Co., Ltd. Industry watchers on the island said the allying suggests that makers of network-communications equipment PC makers have emerged as another major force pushing the formation of the next-generation mobile industry in Taiwan.

ò Ritek Corp. is expected to replace Sony as the world's third-largest supplier of blu-ray DVD discs this year, trailing only Japanese counterparts TDK and Panasonic. TDK and Panasonic of Japan were the top-two blu-ray disc brands in 2007, each commanding a global market share of 30 percent. Sony ranked No. 3 with an 11 percent share. Ritek and another local producer CMC Magnetics Corp. took the No. 4 and No. 6 position, respectively. Ritek has been actively ramping up production of blu-ray DVD discs when such format has been confirmed to be the next-generation DVD mainstream standard to win more business opportunities brought by the upcoming Beijing Olympics.

ò Hon Hai is studying the feasibility of setting up a China electro-aluminum plant. The group is collecting information to assess a possible investment in Guangxi in southern China involving the production of aluminum electronic products. The group includes Taiwan-based Hon Hai Precision Industry Co. Ltd. and Hong Kong-listed Foxconn International Holdings, among others.

ò According to MediaTek, a chip developed by the company that made it easy for companies to put touch screens on handsets boosted volume handset sales. The use of touch screens on mobile phones is already soaring, and the introduction of a new line of small computing devices designed to connect people to the Internet is also fueling their use. The touch screen market will grow to a value of US$3.1 billion this year from US$2.78 billion last year. Three trends are driving the market, starting with the iPhone craze. MediaTek's main customers are in China, and the chips have been used in scores of handsets there. A new category of devices is also coming out that is increasing touch screen use, known variously as ultramobile PCs (UMPCs), mobile Internet devices (MIDs) and a growing list of names. On a separate note, MediaTek acquired NT$396.05 million (US$413.1 million) of Nanya Technology CorpÆs bonds and is expected to hold the bonds until maturity.

ò Taiwan Semiconductor Manufacturing Co. announced that it has signed an exclusive agreement with Blaze DFM, Inc. to offer Power Trim Service, a new service offering combining a patented Blaze power optimization technology with special variations of TSMC's advanced manufacturing process. Under the terms of the agreement, TSMC will make available to its customers the Power Trim Service which provides significant leakage power reduction while maintaining chip performance and area. In addition to delivering substantial reductions in leakage power above and beyond existing techniques already employed in the chip, the Power Trim Service also significantly reduces leakage power variability, a critical power issue to overcome in next generation system-on-chip (SoC) designs.

ò Powerchip Semiconductor Corp. is considering a private equity placement worth up to US$350 million to raise funds to buy raw materials. Powerchip would raise the funds by issuing an overseas exchangeable corporate bond but the timing would depend on market conditions, the company said in a statement to the Taiwan Stock Exchange. Powerchip is not in talks with potential investors on a sale at the present time. Powerchip and other makers of dynamic random access memory (DRAM) chips, used primarily for PCs, are struggling in the battered computer memory chip market, but some analysts expect the sector to recover in the second half of the year.

ò America Online has recently opened a tailor-made portal site for Taiwanese Internet users in cooperation with udn.com owned by the United Daily News Group, starting its first portal site in East Asia. The site will offer free electronic-mail, instant messaging, as well as online video and audio search services in the initial stage. The company chooses Taiwan as its springboard into the East Asian market in light of the islandÆs well-developed information technology industry and its mature Internet market. The company will also work with Phoenix TV of Hong KongÆs Internet business and co-introduce portal site and search engine with Hewlett-Packard Co. (HP) for Taiwanese holders of HP computers.

Media, Entertainment and Gaming
ò TaiwanÆs Cable Broadband Institute (CBIT) has joined forces with the Cable & Satellite Broadcasting Association of Asia (CASBAA) to call for a lighter regulatory regime for pay-TV in the country. CASBAA has released a report analyzing the market structure, while CBIT has introduced a white paper featuring a series of recommendations for changes to Taiwan s pay-TV regulatory environment. It is remarkable that while Taiwan is the largest producer of LCD TV panels in the world with one of the highest cable TV penetration markets anywhere, it has yet to undergo a digital transformation. The status quo restricts content choice and services that are already available to other consumers in the rest of Asia. This position needs urgent attention.

Hong Kong

Mobile/ Wireless
ò Lenovo Mobile, the former handset unit of Lenovo Group, is set to go public soon. However, the company did not say when or where the company would be listed. Lenovo completed the sale of its handset unit on March 31 in a deal valued at US$100 million. Lenovo's decision to divest the handset unit helped narrow the company's focus to its core computer business. The company's cell-phone sales had been limited to China, and the unit struggled in recent months in the face of tough competition.

ò Samsung will make use of the Olympics opportunity to launch new mobile phone models and it sets a Hong Kong mobile phone market share goal of 20 percent in 2008. The company will launch two 3.5G Olympic mobile phone models before early June. The company has launched a limited edition Olympics mobile phone model E848 in October 2007 in Hong Kong which had initial monthly sales of over 1,000 handsets. Through the Olympics promotions, Kim hopes Samsung's mobile phone market share will jump to 20 percent from the current 15 percent in 2008 to land itself on the second place. The company will promote high-definition television set (HDTV) sales actively. Samsung will increase its marketing expanse by 30 percent to snatch the market leader spot. The brand's HDTV market share in March was 15 percent and it hopes to reach 25 percent at the end of 2008. Kim notes that mobile phone and HDTV are the two pillar operations of the company.

ò Minority shareholders of Pacific Century Premium Developments Ltd. (PCPD) rejected PCCW's US$333 million buy-out plan. PCCW which owns 61.53 percent stakes in PCPD, planned to buy all the shares of the real estate firm that it did not hold yet. The company proposed to offer HK$2.85 (US$0.4) per share for about 926.13 million outstanding PCPD shares. If this proposal got approved, it will delist PCPD before May. 12, 2008. Analysts noted that the offer price was too low, about 10 percent discount to PCPD's book value in 2007, or an 11.2 percent discount to its adjusted net tangible asset value last year. PCCW's Shares were flat while PCPD were suspended on Apr. 17.

ò ACL Semiconductors, Inc. announced its audited financial results for the year ending December 31, 2007. The company reported of US$160.4 million compared with US$105.6 million for the prior year ending December 31, 2006, an increase of 52.4 percent over the comparable period. The company reported US$.0621 per share in EBITDA. EBITDA for the year was US$1.8 million versus US$1.5 million for the same period in 2006, an increase of 15.5 percent. Operating expenses for the year increased 5.4 percent from the previous period to US$3.1 million. The company reported a decrease in net income for the 2007 calendar year to US$331.1 thousand compared with US$555.4 thousand for the prior 2006 calendar year.

ò Lenovo Group was considering acquisitions to expand outside Asia into markets including the Middle East and Turkey where computer use was less widespread as a slowdown in the US economy threatened to curb spending on technology products. The boom is attracting global firms in sectors from financial services to technology hoping to cash in on growth in consumer and corporate spending. Lenovo was also trying to cement its place in the U.S. consumer arena, where it introduced its first computers in January. The firm beat market expectations as it tripled quarterly earnings in the third quarter on strong Asian demand.

ò The Australian government canceled a A$958 million (US$869 million) funding agreement with a venture led by Singapore Telecommunications Ltd. to build a broadband network in Australia's more remote areas, saying the proposed network didn't meet coverage requirements. The proposed network by OPEL Networks Pty. Ltd. a joint venture of SingTel's Australian unit, Optus, and a unit of Futuris Corp. of Australia didn't satisfy contract conditions. The decision will likely make an upcoming tender for the government's planned nationwide high-speed broadband network even more competitive.

ò Vietnam will well operate and tap its first telecommunication satellite, which was successfully launched and plan to launch one or two additional satellites in the near future. From mid-May to the end of this year, some major Vietnamese enterprises, including telecommunications company Viettel, Voice of Vietnam and Vietnam Television will complete the shift from renting foreign satellite services to using services based on the medium-sized satellite coded Vinasat-1, Tran Duc Lai. The 2.6-ton telecommunication satellite produced by US firm Lockheed Martin was successfully launched by French company ArianeSpace in Kourou site in French Guiana on the northeast coast of South America.

ò Infosys Technologies Ltd. reported a 9.2 percent rise in its fiscal-fourth-quarter net profit. The slowing of U.S. economy cut the pace of the company's growth. But India's second-largest software exporter forecast higher-than-expected revenue growth of 19.2 percent to 21.2 percent for the fiscal year that began April 1, raising hope that the impact of an economic slowdown in the U.S. will be limited. Consolidated net profit for the three months ended March 31 rose to 12.49 billion rupees (US$313.3 million) from 11.44 billion rupees (US$287 million) a year earlier.

ò Indonesian Internet companies blocked access to YouTube and MySpace, heeding a government order aimed at stopping people from watching an anti-Islam film by a Dutch lawmaker. Anti-immigration politician Geert Wilders posted the 15-minute film on the Internet on March 27. It has since been widely available on blogs and file-sharing sites. Indonesia's main Internet service providers had temporarily blocked YouTube, MySpace, Google Video and other file-sharing Web sites. The government ordered the providers to block the sites last week, saying Mr. Wilders's film could disturb relations between the faiths.

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