Microsoft lands IPTV deal in China

Microsoft said on Jan. 12 that its Mediaroom software is being used by a Chinese TV provider to offer Internet Protocol television over a traditional cable network.

The deal, with Guangzhou Digital Media Group marks two first for the company--its first IPTV deal in China as well as the first time its software has been used to power TV over a cable network.

"We had always intended it to go to many different types of operators," said Ben Huang. "Now you are starting to see the fruits of that labor."

Until now, its software had been used by telecommunications firms looking to get into the TV business by offering IPTV.

The China win follows Microsoft's announcement at the Consumer Electronics Show of Mediaroom Anytime, a feature that lets users not just record into the future, but also go back in time and watch a program that has already aired, but which the consumer did not specifically choose to record.

Both Guangzhou Digital and Singapore's SingTel are expected to start using the feature this year, Huang said.

Microsoft has poured hundreds of millions of dollars in its television business for more than a decade, but only recently has seen it turn into a serious business.

"It took us a few years to get that first million," Huang said. "It took us another six months to get to 2.5 million."

(CNET)

Semtech Expands Presence in China

CAMARILLO, Calif., Jul 24, 2008 -- Semtech Corp. , a leading supplier of analog and mixed-signal semiconductors, today announced it has opened a new design and application center in Shenzhen, China. The new design center demonstrates Semtech's expanded level of commitment to customers in the region. The center will provide design and applications support for Semtech's Protection, Power Management and Advanced Communications & Sensing products.

The center's comprehensive Protection testing laboratory matches the capability available at Semtech's US headquarters, offering extensive testing capabilities and ESD protection consultancy to support a wide range of customers in telecomm, mobile phones, set-top boxes, digital TVs, and other high-end consumer applications. The center is also equipped with state-of-the-art equipment and is being staffed with experienced engineers to support customers designing analog platforms in the high-end Consumer, Communications, Computing and Industrial segments. The office will focus on ultra-low power and green power applications and will initially provide system-level application support, system testing, turnkey solution assistance and reference design development.

"Expanding our design and application assistance in China allows us to provide our customers in the region with a broad range of resources and support for leveraging Semtech's advanced technology in their designs," said Dr. Liu Yang, Director of the Center. "We are committed to providing a higher level of service to our customers and helping to speed their time-to-market."

(BUSINESS WIRE)

China: Lenovo Plunges as Rivals Gain

As it fights PC rivals worldwide, Lenovo has always been able to count on an ace. The Chinese company may be a laggard in the U.S. compared to Dell (DELL) and Hewlett-Packard (HPQ). And it may recently have fallen behind Taiwanese archrival Acer, which became the No. 3 company after taking over Gateway last year. But nobody has been able to come close to Lenovo in its Chinese backyard.

Thanks to Lenovo's well-known brand, widespread service network, and advantage as the hometown favorite, the company is No. 1 in China, the world's second-largest computer market after the U.S. China accounts for 34% of Lenovo's sales and 71% of the company's profits. That Chinese stronghold has helped put Lenovo back into BusinessWeek's IT 100. The company, which wasn't on the list last year in part because of the challenges it faced as it digested the acquisition of IBM's (IBM) PC division, makes a solid return this year, at No. 46. That's behind HP's 30 but well ahead of Acer at No. 71. Meanwhile, Dell doesn't make the list at all.

But as Lenovo's shares plunged today in Hong Kong trading, some investors are wondering whether that advantage still holds. Lenovo on May 22 announced it had earned $140 million in the quarter, on sales of $3.74 billion. Greater China sales growth for the quarter was 18% better than the same quarter a year ago, compared to just 3% in the U.S. And while Lenovo has unloaded its cellular handset business, selling the division for $65 million earlier this year, the company continues to be in the driver's seat in China when it comes to PCs. According to a May 23 report by Merrill Lynch (MER) analysts Daniel Kim and Ronnie Ho, Lenovo's "dominant position in China" is an important factor in their belief that the company "has all the ingredients for further success and solid profits."

Not everyone is so sanguine about Lenovo's prospects, however, or its position in China. Alan Hellawell and K.C. Kao, Deutsche Bank (DB) analysts, released a report after the earnings downgrading Lenovo to "hold." One concern they cited was "heavier competitive pressures in China." That downgrade, and the concerns that other investors had after going through Lenovo's numbers, helped send down the company's Hong Kong-listed stock on Friday(May 23th). Lenovo shares plunged 6.8% and are now down 14% for the year. That's still better than Dell's negative 15% and only slightly worse than Hewlett Packard's minus 11%. The only one of the four major PC makers with a stock price in the black for the year is Acer, up 1% year-to-date.

New Threats

The most recent market statistics from market research firm International Data Corp. provide some indication that there's reason for Lenovo to be a little worried about China. Lenovo is still the biggest in Asia Pacific ex-Japan, a region that is dominated by China. Lenovo has 16.4% of the market, up from 15.8% a year ago, according to IDC's preliminary first-quarter figures released last month. Lenovo's rivals may be behind, but they're gaining Asian share even faster. For instance HP was at 13.8% a year ago and is now at 15.1%. Dell was at 7.2% and has gone to 9.1%. Acer has gone from 5.6% a year ago to 7.2% now. "Lenovo is holding its own in China, but increasingly there is pressure coming up from Dell and HP," says Bryan Ma of IDC. More aggressive movement by the Big Two "is not going to dethrone Lenovo," Ma adds. "But it is going to put pressure on it."

The big losers for now are China's also-ran computer makers. Companies such as Founder have benefited from a five-year government program to supply computers to schools in the Chinese countryside. That $290 million program has now concluded, though, and while the government is likely to continue buying PCs from local vendors for the education sector, demand isn't going to be as high as before. That's bad news for the smaller Chinese companies. "Some of the local vendors are heavily dependent on the local education segment," says Ma.

Lenovo has a much wider base of support in China, so a slump in education sales won't hurt the company dramatically. However, as HP and Dell further establish themselves in the Chinese market, the Lenovo rivals will be better positioned to start chipping away at Lenovo's dominant position. And with sales in the U.S. in the doldrums because of the American economic downturn, the fight for the Chinese PC market is going to get even tougher.

(Business Week)

Google 'breaching China's state secrecy laws'

China is to investigate Google and other websites for allegedly breaching state secrecy laws and showing “illegal” maps of the country.According to Min Yiren, vice head of the State Bureau of Surveying and Mapping, authorities hope to get rid of online maps that wrongly depict China’s borders or that reveal military secrets, the People’s Daily said.

No fewer than eight ministries and bureaus are to examine online maps to see whether they breach laws or undermine the country’s “territorial integrity”.

Territorial integrity is usually a code word for ensuring that maps and other documents clearly mark the island of Taiwan as part of China, as China claims, and do not distinguish it in some way as to suggest it might be independent.

It could also refer to the complex patchwork of zones along China’s long and mountainous border with India that are bitterly disputed between the two countries.

When satellite images first went online, Chinese internet users – now the most numerous in the world – took great delight in sharing the co-ordinates of previously invisible places such as the central leadership compound in Beijing and operational military bases.

Online maps could reveal much about aspects of Chinese life, from labour camps to military installations, when set against such images. Last week, satellite photographs of China’s newly expanded submarine base on the island of Hainan were disclosed.

Mr Min said there were 10,000 illegal maps online in China. According to People’s Daily, “redrawing China’s borders” was the top concern of the investigation, which started last month.

Apart from Taiwan, other disputed islands include the Spratley and Paracels in the South China Sea, which are claimed by a number of south-east Asian states as well as China, and the Diaoyu islands in the East China Sea, which are currently occupied by Japan.

The bureau gave no indication of what the result of the investigation was likely to be. Most of the companies named were China’s own internet giants, such as the Sohu.com chain of websites and Baidu, the most popular Chinese search engine, all of which conform tightly to government censorship requirements.

Google China is also obliged to conform, censoring its search facility to focus on approved websites. But much of its operations are hosted on Google servers elsewhere, over which the Chinese authorities have no authority, though they can order them to be blocked by the so-called “Great Firewall” of China.

(Telegraph.co.uk)

3Com's new chief to be based in China

Network equipment maker 3Com announced Wednesday a new CEO who will be based in China.

Robert Mao, 64, will succeed Edgar Masri as chief executive officer. Mao, who is fluent in Mandarin and English, had most recently been 3Com's executive vice president for corporate development. Prior to working at 3Com, he headed up Nortel Network's China operations. And before that he had worked for the French telecommunications equipment maker Alcatel, which is now Alcatel-Lucent.

3Com also said Wednesday that it has hired Ronald Sege, 51, as chief operating officer. Sege, who will run 3Com's U.S. operations, returns to 3Com after a decade. From 1989 to 1998, Sege held several senior executive positions at 3Com. Most recently he had been CEO of the Wi-Fi equipment maker Tropos from 2004 until this year.

The news of the management shift comes after the U.S. government essentially put the kibosh on a proposed $2.2 billion buyout of 3Com by Bain Capital Partners and Huawei Technologies.

Bain Capital had originally agreed to buy 3Com in September 2007 in a deal that would have given Huawei Technologies, which is based in China, a 16.5 percent stake in the company. As part of the deal, Huawei would have had the opportunity to increase its share by another 5 percent.

The Bush administration had raised security concerns over the deal. 3Com makes network security equipment that is sold to the U.S. Department of Defense. The government has traditionally been leery of allowing foreign ownership of critical communication assets.

Last month, after the Committee on Foreign Investment, an official security panel under the U.S. Treasury Department essentially blocked the deal, Bain Capital Partners withdrew its bid for the company.

3Com, which was founded in 1979 by the Ethernet inventor Robert Metcalfe, helped shape the early Ethernet and IP networking market. The company had many successes over the years, including the spin-off of the handheld device company Palm. But over the last decade, the company has lost much of its luster and market significance as competitors, namely Cisco Systems, have risen in importance.

Despite the company's decline over the years, 3Com has survived. And in recent years, it has recognized China as a key emerging market. In 2003, it formed a joint venture with Huawei to better serve the Chinese market. And in November, 3Com paid $882 million to buy Huawei's 49 percent stake in the venture. Today, about 4,000 of 3Com's 6,000 employees are based in China with only a little over 400 employees working at its U.S. headquarters in Massachusetts.

3Com's decision to put Mao in charge is yet another signal that the company sees China as its most important market.

"In addition to his 30 years in the global IT and telecommunications industry, Bob's bi-cultural background, extensive business experience in Asia and fluency in Mandarin and English offer a rare set of skills that can bridge Chinese and western organizations," Eric Benhamou, chairman of 3Com, said in a statement. "Bob brings the company a set of skills that are uniquely fitted to 3Com's current business needs. Having him based out of China and having an experienced leader of Ron's caliber based in the United States will allow us to speed execution of our global business plan."

(CNET news.com)

Microsoft, Novell stressing China's Linux market

Novell Inc. and Microsoft Corp., trying to expand the reach of their unusual alliance, say they plan to put a bigger emphasis on the Chinese market.

The companies say they will make an extra investment to sell more support subscriptions for Novell's SUSE Linux Enterprise Server operating system in China. The idea is to court companies currently using Linux without any software support, often for free.

China is "quite a large and growing market in terms of Linux," said Susan Heystee, Novell's vice president and general manager of global strategic alliances. There is "a very large nonpaid Linux market" in China, she said, but many of those companies are now looking for support for mission-critical systems and for virtualization, setups where multiple operating systems can run on one piece of hardware.

Under their partnership, announced in November 2006, Microsoft agreed to buy and redistribute $240 million worth of SUSE Linux support certificates. The alliance was seen as unusual because Linux has long been one of the biggest competitive threats to Microsoft Windows.

As part of the 2006 deal, the companies agreed not to pursue claims against each other's users for patent infringement.

That provision has stirred controversy in the open-source software community by appearing to lend support to Microsoft's separate claims that Linux violates its patented technology. Novell has publicly disputed those claims.

As part of the announcement Sunday, the companies said People's Insurance Co. of China, Dawning Information Industry Co. and The Dairy Farm Co. will receive certificates from Microsoft for three years of SUSE Linux Enterprise Server support from Novell.

(Seattle Post Intelligencer)

The companies declined to say how much more they will be investing as part of the partnership's bigger focus on China.

Google to add China staff, promote products

BEVERLY HILLS, California - Google Inc, the world's Internet services leader, plans to boost hiring in China by one-third this year and increase promotional spending to win market share, a senior company executive said on Saturday.

Lee Kai-Fu, Google's president for Greater China, said in an interview that the Silicon Valley company intends to add 200 staffers in 2008 to its existing 600 employees and to keep up that level of hiring for the next three to five years.

The new jobs will be in technology and sales and marketing and half of the jobs will go to new university graduates, Lee told Reuters on the sidelines of the Committee of 100 conference, an annual gathering of Chinese-American leaders. The three-day event in Beverly Hills ends on Saturday.

Google, one of the most popular places to work among recent graduates, has sharply curtailed hiring. The company has hired around 800 new employees worldwide in each of the past two quarters, excluding acquisitions, half the rate of a year ago.

Google, China's No. 2 provider of Web search services behind domestic market leader Baidu.com Inc, also will increase promotional spending for its products such as Google Maps and its e-mail service called Gmail, Lee said.

"You will not see a Google advertisement on TV but you will see more and more promotions and advertisements about Google's products at Chinese Web sites," Lee said, describing how Google plans to rely on search ads instead of conventional marketing.

He said Google also would look to strike more profit-sharing partnerships with Web site operators along the lines of one it already has with Chinese Internet media site Sina.com for news, advertising and search services.

The goal is for Google to boost its own online advertising revenue in China, where millions of young Chinese people are rapidly adopting Internet shopping, Lee said.

(Reuters)

Intel Forms $500 Million Fund for China

Beijing, April 8 -- Intel Corp., the world's largest computer-chip maker, formed a $500 million China fund to more than triple investments in companies in the world's biggest semiconductor market.

Holdfast Online Technology Co. and Newauto Video Technology Inc. will be among the businesses targeted by Intel Capital's China Technology Fund II, the chipmaker said in a statement in Beijing today. The previous China fund spent $200 million in more than 28 companies, the Santa Clara, California-based company said.

Intel, whose processors power three-quarters of the world's personal computers, boosted spending in the country as it seeks to gain a bigger share of the world's fastest-growing major economy. Chip sales in China will surpass $28 billion in 2011, driven by demand for computing and consumer electronics, according to February estimates at research firm IDC.

``We want to foster innovation and entrepreneurship in China,'' Arvind Sodhani, president of Intel Capital, said at a briefing in Beijing today.

Sodhani said the fund, which should be used up in five to seven years, is the chipmaker's single largest in one country.

``That should give you a pretty good idea of the importance and size of commitment to China,'' he said, declining to say what returns the company's investments had made in the country.

Build Factory

Intel is building a $2.5 billion chip factory, its first in Asia, in the Chinese port city of Dalian. The Asia-Pacific region, including China, generated $5.3 billion, or 50 percent, of the company's sales in the fourth quarter.

Holdfast Online is a developer of technology for online gaming, and Newauto Video makes video equipment and network gear for use at the Beijing Olympics, the statement said, without specifying the amount that will be spent on the two companies.

Intel shares fell 67 cents to $21.08 at 4 p.m. New York time in Nasdaq Stock Market trading, leaving them down 21 percent this year.

The company, which has investment managers based in Hong Kong, Shanghai and Beijing, made its first strategic investment in China in 1998.

Last year, Intel Capital invested about $639 million, 37 percent of which was being spent outside the U.S., compared with less than 5 percent in 1998. Since 1991, Intel Capital has invested more than $7.5 billion in about 1,000 companies across more than 45 countries.

Last year, U.S.-based venture capitalists invested a record $1.4 billion in China, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association.

(Bloomberg)

Baidu snags Apple's China chief for COO role

HONG KONG, April 2 - Baidu.com Inc has poached Apple Inc's former China head for the role of chief operating officer, the latest high-level executive shuffle at China's largest search engine firm.

Peng Ye, who oversaw all business operations in China for Apple as the U.S. firm's country general manager, joins Baidu on the heels of the appointment of ex-General Motors executive Jennifer Li to the post of chief financial officer.

Ye's posting takes effect April 25.

Baidu maintains an edge over Google Inc as the most popular search engine in the world's No. 2 Internet arena. China had 210 million Internet users at the end of 2007, second only to the United States, and that Web population is set to become the world's largest in 2008. (Reporting by Edwin Chan; Editing by Anne Marie Roantree)

(Reuters)

China Law Could Impede Microsoft Deal for Yahoo

SAN FRANCISCO — Microsoft’s hostile-takeover attempt against Yahoo may encounter an unexpected hurdle in August after a Chinese antimonopoly law takes effect that will extend the nation’s economic influence far beyond its borders.

The law, which goes into effect on Aug. 1, is intended to strengthen an existing set of antitrust regulations the Chinese originally established in 1993. It will make China a third sphere of regulatory influence, matching the power of the European Union and the United States, according to legal specialists in this country and in China who have studied it.

Formally enacted by the National People’s Congress last year, the measure gives Chinese regulators authority to examine foreign mergers when they involve acquisitions of Chinese companies or foreign businesses investing in Chinese companies’ operations. Beijing could also consider national security issues, according to a report by the official news agency Xinhua.

The law could give China influence in Microsoft’s courtship of Yahoo because in August 2005, Yahoo, a premier search portal, invested $1 billion in Alibaba.com, China’s largest e-commerce business. The investment gave Yahoo about a 40 percent stake in the Chinese company. Alibaba officials have said they believe that a Microsoft takeover of Yahoo would set in motion a buyback provision, making it possible for them to gain independence from Microsoft.

Nathan G. Bush, an antitrust law specialist with O’Melveny & Myers in Beijing, said the law represented the ascendance of China “as another regulatory capital contending for influence with Brussels and Washington.”

“Multinational corporations will need to develop strategies for all the markets they operate in,” he added, “and China is a big market.”

Whether China would seek to review a Microsoft acquisition, and what kind of posture it might take, would be closely watched by regulators and global companies as an indication whether it will play a conciliatory or a nationalistic role on the world stage.

“I don’t think anyone has worked through the issue of where an Internet merger should be reviewed, given that it truly is a World Wide Web,” said Andrew I. Gavil, a law professor at Howard University.

There are potentially dozens of jurisdictions that could claim oversight in such a deal because of the global business interests of the two huge companies and because it could potentially transform the Internet into two megaportals, Google and Microsoft. Other parts of the world that might have an active interest in the outcome of a merger include South Korea, a vibrant Internet economy where an antitrust investigation into Microsoft was previously opened.

Executives at Microsoft and Yahoo declined to comment on the possible effect of the new Chinese law. In rejecting Microsoft’s takeover bid in January, Yahoo’s chief executive, Jerry Yang, said in a letter to employees that the offer substantially undervalued the company, in part because of the significant growth potential of the Alibaba business in China.

The issue of whether the Beijing authorities will harmonize the law with foreign antitrust laws or use it to fire a shot across the bow of global businesses was sharpened last week after an effort by Huawei Technologies to invest in 3Com collapsed in the face of national security concerns in Washington.

The Committee on Foreign Investment in the United States had examined the purchase, through which Huawei would have gained a stake in 3Com. The American company’s Tipping Point subsidiary makes Internet intrusion-detection software, a technology that the United States maintains has national security implications.

Before the attempted investment fell apart, senior Chinese officials were quoted as saying they thought that the deal did not have national security implications, and that American regulatory efforts were a cover for protectionist trade practices.

National security has played a role in other attempted deals involving Chinese companies. In 2005, the Chinese National Offshore Oil Corporation made a high bid to acquire Unocal, leading to a vote in the House of Representatives to block the deal. Soon afterward, the Chinese company, known as Cnooc, withdrew its bid and Unocal was acquired by Chevron.

In the case of the proposed Microsoft-Yahoo transaction, the Chinese have in recent years become more and more alert to the role the Internet plays in their economic and political affairs.

Last week, a vice minister in the State Council Information Office, which oversees the Internet, said there were 230 million Chinese users of the Internet. He said the Internet sector accounted for 7 percent of the country’s gross domestic product, and he expected that to rise to 15 percent in three to four years, according to a Reuters report.

The official, Cai Mingzhao, warned that foreigners should not use the Internet to interfere in Chinese internal matters, according to a report in The Guardian.

Even if the Chinese government did not try to prevent a takeover by Microsoft, a prolonged review could substantially damage the value of the business, a number of Internet industry executives said.

(New York Times)

Dell to boost purchases from china

March 20 -- Dell Inc., the world's second-largest maker of personal computers, plans to boost purchases of components from Chinese suppliers by about 28 percent this year as the company increases its presence in its fastest-growing market.

Dell will buy $23 billion of computer parts from China, compared with $18 billion in 2007, Chief Executive Officer Michael Dell said at a press conference in Beijing today. ``Including last year, this year and expected purchases next year, Dell will purchase $70 billion worth of computer-related supplies and equipment from supplier partners in China.''

The PC maker plans to win customers from Chinese market leader Lenovo Group Ltd. as it expands outside the U.S. Dell estimates it will contribute more than $50 billion to the Asian nation's gross domestic product this year and ``support'' more than 2 million jobs, the statement said.

``Dell has been shifting more procurement to Asia to reduce costs and increase flexibility, and this trend has been going on for a time,'' said Ellen Tseng, an analyst at Nomura Securities in Taipei.

China's growing wealth is fueling demand for electronic products. The country's economy expanded 11.4 percent in 2007, the fastest pace in 13 years. The nation's retail sales rose 16.8 percent last year, driven by incomes that climbed 17.2 percent in urban areas and 15.4 percent in rural areas.

Dell in October started selling computers in fewer than 100 stores in China through Gome Electrical Appliance Holdings Ltd. The U.S. company plans to expand its presence to 1,200 cities in the nation this year from 45 at the end of last year, Amit Midha, the PC maker's greater China president, said at the presser.

`Growing Rapidly'

``We've become the third-largest computer-systems company in China, and are growing rapidly,'' Dell said in the statement. ``Dell will continue to play a key role in China in the `connected era.'''

The company needs to expand its distribution and improve product design to challenge Lenovo in the consumer and small- business markets, said Bryan Ma, an analyst at research company IDC in Singapore.

``In China, Dell's strength is in the large-enterprise market, and this should continue,'' Ma said.

Lenovo had a 28.8 percent share of the China market in the quarter ended Dec. 31. Dell trailed at fourth place with 7.9 percent, behind Hewlett-Packard Co. and Founder Technology Group Corp., according to IDC.

(Bloomberg)

China becomes IBM global innovation hub

International Business Machines Corp. (IBM) issued an annual report in Beijing on March 17. It stated that China has become a hub for IBM's global innovation and plays an important role in the company's global planning.

Zhou Weikun, Chairman of IBM China Region said that, along with China's rapid economic development, and based on China's strengthening innovation capabilities, IBM's global resources are now accelerating transfers to China. He said that IBM's first Global Supply Chain Innovation Center has settled in China; the company's eastern series of servers have been specifically designed for China; and SmartSCOR products have received the global supply chain award. These achievments indicate that China is at the forefront of global innovation.

At present, 65 percent of its employees and 60 percent of its income come from regions outside the United States. IBM's procurement centre headquarters were established in Shenzhen; and the global payment center was established in Shanghai. IBM's business emphasis in China in 2008 takes software, hardware, IT services and business services as pillars; and their own global conformity restructuring to provide services such as business consulting, IT services, and basic infrastructure for Chinese enterprises during their globalization process, according to Zhou Weikun.

(People's daily)

China's Huawei suffers setback as US IT deal stalls

NEW YORK, Feb 20, 2008 (AFP) — The global Chinese telecommunications company Huawei suffered a setback Wednesday as US technology group 3Com and private equity firm Bain Capital said their proposed merger plan had hit a hurdle.

The two American firms said in a joint statement that they "remain committed" to Bain's proposed 2.2-billion-dollar takeover of 3Com, but announced they had withdrawn a takeover filing with the powerful Committee on Foreign Investment in the United States (CFIUS).

The companies withdrew the takeover application with CFIUS despite 3Com's assertion late last year that the deal would not threaten US national security.

Huawei, which is based in the Shenzhen region of China, stands to gain a hefty 21.5 percent stake in 3Com if Bain's takeover of the technology firm is approved by the US government.

3Com executives had stressed that Huawei would gain no "operational control" over the US firm if the deal wins a green light, but the companies withdrew their takeover blueprint amid CFIUS concerns about the deal.

CFIUS, an interagency panel that counts representatives from the Treasury, the Defense Department and the State Department among other government agencies, would likely have given the proposed deal a tough review.

The panel has raised concerns about foreign investments in the past and some US lawmakers have voiced concern about Huawei gaining a stake in 3Com.

Congressman Duncan Hunter, the top Republican on the House Armed Services Committee, welcomed the companies' announcement.

"Our nation's security interests must always prevail. It is my hope that this proposed transaction will not be repackaged and presented to CFIUS for further review," Hunter said.

The withdrawal of the takeover bid with CFIUS is also a setback for Massachusetts-based 3Com, which specializes in voice and data networking equipment, and Bain.

A source close to the negotiations, who requested anonymity, told AFP the proposed deal would likely require substantial changes before winning potential CFIUS backing.

A 3Com spokesman, John Vincenzo, said the company had held "several discussions" with CFIUS in recent weeks prior to withdrawing the current takeover blueprint.

3Com's board unanimously approved the deal with affiliates of Bain Capital Partners on September 28.

In a regulatory filing with the Securities and Exchange Commission in October, 3Com stated that Huawei "will not have any access to sensitive US-origin technology or US government sales as a result of this transaction."

Edgar Masri, 3Com president and chief executive, voiced disappointment Wednesday, but said the companies would seek to address the government's concerns about the potential tie-up.

"While we work closely with Bain Capital Partners and Huawei to construct alternatives that would address CFIUS' concerns, we will continue to execute our strategy to build a global networking leader," Masri said.

Investors punished 3Com's shares, as its stock tumbled 23 percent to close at 2.87 dollars.
Chinese firms are increasingly seeking US investments, especially in banking and finance.

China's state-controlled China Investment Corporation snapped up a five-billion-dollar stake in Morgan Stanley, one of America's biggest investment banks, in late December.

Another US banking group, Bear Stearns, announced a strategic tie-up with China's state-controlled CITIC Securities Co. Ltd in late October involving investments of at least two billion dollars.

(AFP)

ZTE Enters U.S. Mobile Phone Market

ZTE USA, a subsidiary of China's largest telecom equipment manufacturer ZTE Corp., on Thursday began offering its first mobile phone for the U.S. market.

The ZTE C88 isn't a ground-breaking device, but it gives mobile users some freedom and a simpler alternative to expensive computer-like phones. It costs between $129 and $149, with basic features including Bluetooth, a camera, and Internet browsing.

As its core business, ZTE specializes in wireless and networking products such as CDMA platforms and WiMax equipment. Last year, Mexico City's Mayor Mercelo Ebrard signed an agreement with ZTE to build a Wi-Fi network connecting schools and government offices. The free citywide Wi-Fi network is expected to give access to 8 million residents in Mexico City.

(Information Week)

Microsoft accused of patent violation in China

• putting Microsoft in an unfamiliar position of defending its practices in China.

BEIJING - A small Chinese high-tech firm is suing Microsoft Corp because it says the software giant has stolen its creation that allows Internet users to type Chinese characters, but Microsoft countered the claim on Friday.

Zhengma, the core product of Beijing-based Zhongyi Electronic Ltd., allows Internet surfers to convert Chinese words typed in the Roman alphabet into Chinese characters. "Microsoft hasn't paid us for 10 years, since they paid for using Zhengma in Windows 95 in 1998," Lan Dekang, general manager of Zhongyi, was quoted by Xinhua news agency.

The lawsuit puts Microsoft in the unfamiliar position of defending its intellectual property practices in China after years of fighting piracy of its software there.

Microsoft said in a statement that it had the right to use Zhongyi's product and fonts after the two parties entered into agreements under the supervision of Chinese government agencies.
"Microsoft has fully performed its obligations including paying Zhongyi the license fees in accordance with the license agreements," the statement said.

Zhongyi has not yet established a litigation target because it does not know how many sets of Windows operating systems are in use, Xinhua reported.

(Reuters)

Internet users in China reachs 210 million

• heads for the world's largest online population

BEIJING — China had 210 million Internet users by the end of 2007 and will soon have more web surfers than any other country on the planet, an official report said Thursday.

China's online population was only five million less than the US, the China Internet Network Information Center (CNNIC) said in a report. "At the beginning of 2008, China will become the country with the largest online population in the world," the report said.

China added 73 million new online users last year, 40 percent came from rural areas, where development has so far been held back by low incomes and weak infrastructure.

The number of rural Internet users reached 52.6 million by the end of 2007, up a whopping 127.7 percent from a year earlier, the CNNIC said.

It noted that China's Internet penetration rate, the ratio of Web user numbers to the country's total population, was only 16 percent, lower than the global average of 19.1 percent. The figure in the US is more than 70 percent.

Meanwhile, the number of Web users accessing through their mobile phones nearly tripled to 50 million, based on the fact that China already has the globe's biggest mobile phone user population, numbering 539.4 million at the end of last November.

The most used online service in China is music, followed by instant messages, movies, news, search engines, online games and email.

About 24 percent of Netizens had updated their own blogs within the past six months, while only a third of respondents believed what the bloggers write.

More than 40 million people play online games in the country, 22.36 million of whom are described as "regular subscribers". The online games market is estimated to have generated $1.45bn in revenues during 2007, an increase of 74.6 per cent over last year.

(AFP, Shanghaidaily, Vnunet.com)

Huawei supplies Internet device to Vodafone

• customers can look forward to enjoying high-speed wireless access.

SHANGHAI - Huawei Technologies Co, China's biggest maker of telecommunications equipment, said on Tuesday it had started supplying an advanced device for Internet connection to British mobile phone company Vodafone .

The Vodafone Mobile Broadband USB Modem Stick or E172, which will facilitate fast
Internet browsing, instant access and the uninterrupted ability enabling the data-uploading rate up to 2Mbps and downloading at 7.2 Mbps, will be offered to Vodafone customers in Europe.

"We are excited to have launched the E172 in collaboration with Vodafone," said Steven Lau, director of Huawei European Terminal Department, "We are confident that customers will be delighted with the mobile lifestyle it will bring".

Huawei is a leader in providing next generation telecommunications network solutions for operators around the world, competing with rivals such as Nortel Networks and Cisco Systems .

(Reuters, TMCnet)

China's ZTE wins Libya Tel deal for WiMAX network

• WiMAX is an advanced wireless multimedia network for users of mobile phones and other devices.

SHANGHAI, China's second-largest telecoms gear maker, ZTE Corp said on Thursday it has signed a deal with Libya Telecom & Technology to build Africa's first commercial WiMAX network.

The network will cover eight major cities in Libya, including the country's capital Tripoli, and is expected to be completed by the third quarter of 2008, ZTE said in a statement.

ZTE signed a deal last year to provide WiMAX equipment to No. 3 U.S. wireless firm Sprint Nextel Corp , and has also built 21 commercial WiMAX network trials in other markets including Singapore, Thailand and Saudi Arabia, the statement added.

It did not disclose a value for the deal. Shenzhen-based ZTE's cross-town rival, Huawei Technologies Co Ltd , said early this week that it had won an order for a commercial WiMAX network in Bulgaria from operator TransTelecom.

WiMAX is an advanced wireless multimedia network for users of mobile phones and other devices.

Reuters

Lenovo to enter U.S. consumer PC market

• it features by new software which can recognize users' faces, allowing them to log in to their PC and various applications without passwords.

• to face fierce competition with HP, Dell, Acer, Asustek in the U.S. consumer PC market,as well as in Asia and Europe

SAN FRANCISCO, China's Lenovo Group Ltd introduced its first consumer computers in the United States on Wednesday, expanding in a region it entered in 2005 with the purchase of IBM's PC business.

The unveiling of three new notebook computers with advanced features is part of a broader expansion by Lenovo into the global consumer PC market. The company also plans to sell the new consumer computers in France, Russia, South Africa, India, Australia, Singapore and Malaysia, among other markets.

It already sells consumer computers in China, India and Singapore, but is hoping the new products will help boost its global market share and brand recognition. In the United States, its sales have been limited to businesses.

Lenovo is introducing the new computers as it faces fierce competition from Taipei-based Acer Inc, which sells personal computers to consumers through Best Buy Co. and other major U.S. retailers, as well as in Asia and Europe. Acer bought U.S.-based Gateway Inc in October, part of an effort to edge out Lenovo as the world's third-largest PC maker.

Among the Lenovo computers' features is software that recognizes users' faces, allowing them to log in to their PC and various applications without passwords. The machines also have multimedia technology that lets users listen to music, play videos and view pictures. They come in a variety of colors including red, blue and black.

Lenovo, which had third-quarter revenue of $4.43 billion, plans to start selling one of the new computers in the United States this week for $799 and a second toward the end of January for $1,199. The third model, whose price Lenovo has not yet released, goes on sale in April.

Notebook computers are typically more expensive than similarly configured desktops and carry greater profit margins. They are also the fastest-growing segment of the consumer PC market, with an estimated 21 percent increase in U.S. unit sales in 2007, compared with a 3 percent projected decline in desktop sales, according to market researcher IDC.

Lenovo spokesman James Baussmann said the company is not disclosing sales projections or profit margins for the new products or how much market share it hopes to grab with them.

Lenovo, China's largest PC maker, is among several companies introducing consumer laptops for the U.S. market at the Consumer Electronics Show (CES) in Las Vegas, the industry's largest U.S. trade show, which starts next week.

Acer and Asustek Computer Inc also have new products lined up for the U.S. market that they will unveil at the event. The three Asian companies are trying to develop globally recognized brands and compete with Hewlett-Packard Co, Dell Inc and Apple Inc , the dominant U.S. PC makers.

Asustek, based in Taipei, has less than 1 percent of the U.S. PC market, according to market researcher Gartner Inc.

Lenovo has been growing in the United States through sales of PCs to business clients, many of whom had earlier bought computers from International Business Machines Corp. Lenovo bought IBM's PC business for $1.25 billion in 2005.

The company said it plans a marketing campaign focusing on how its consumer PCs help people capture and transform their ideas, but declined to say how much the campaign would cost.

Lenovo's U.S. notebooks will carry its IdeaPad brand, derived from Lenovo's ThinkPad-branded business laptops that it obtained through the IBM deal.

"To date, we have not made a major entry outside the consumer space outside China," Craig Merrigan, Lenovo's vice president of global consumer marketing, said in an interview. "This represents a significant move for us into a major space."

ASUS, HP

Asus Computer International, the Taiwanese company's U.S. business, is launching a cell phone with satellite navigation technology at CES. It will also unveil a consumer laptop with 1 terabyte, or 1,000 gigabytes, of data storage, the first-ever such device, according to the company.

The notebook and other laptops are part of Asustek's attempt to grab a larger share of the consumer notebook PC market in the United States, where it now has a share of less than 1 percent.

Hewlett-Packard, the world's largest PC maker, also plans to introduce new consumer machines at CES.

They include a light-weight notebook with a rotating screen for entertainment, a high-powered desktop computer that also functions as a television and gaming device and an entertainment hub that lets users download movies, videos, and songs and stream them to TVs and other devices.

The Palo Alto, California-based company also plans to introduce two liquid-crystal display TVs, a 42-inch model and a 47-inch version.

Reuters

China's SMIC licenses chip technology from IBM

• The technology can be used to make mobile devices such as handsets integrated with 3G, multimedia and graphics chips

SHANGHAI, Dec 26 (Reuter) - China's Semiconductor Manufacturing International Corp will license sophisticated chip-making technology from International Business Machines Corp , the companies said on Wednesday.

The 45-nanometre bulk complementary metal-oxide-semiconductor (CMOS) technology will help SMIC upgrade production at its 300-millimetre wafer fabrication facilities, SMIC spokesman Matthew Szymanski said in a statement.

The technology can be used to make mobile devices such as handsets integrated with 3G, multimedia and graphics chips.

A source familiar with the deal told Reuters that the licensing agreement, which was consistent with U.S. export control and technology transfer rules, created a platform for possible future cooperation among IBM's partners in China's electronics market.

Shanghai-headquartered SMIC, the largest semiconductor foundry in China, said earlier this month it had invested $450 million in its new 300mm wafer plant in Shanghai, where pilot production has started. It owns or operates a range of other production facilities around the country. (Reporting by Andrew Torchia; Editing by Richard Hubbard)