Panasonic, UTStarcom Collaborating on China Joint Venture
Nov 6, 2003
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Chinese-American communications equipment maker UTStarcom Inc. and Panasonic Mobile, Japan's top mobile phone maker, agreed today to collaborate on phones for China and other markets.
UTStarcom of Alameda, CA, U.S., and Japan-based Panasonic said they would create a joint venture to build phones based on both international standards for the latest Internet-ready voice and data phones and a Chinese market variation of that standard.
The deal is the latest move by UTStarcom to expand beyond its roots as a supplier of low-cost phone equipment in local Chinese markets into a broad-based supplier of both wired and wireless equipment based on advanced Internet technology.
Shares of UTStarcom gained 5.2 percent, or $1.72, to close at $34.66 in regular session trading on NASDAQ ahead of the announcement. After this news, the stock climbed even higher, trading to around $35.02 in after-hours U.S. trading, for a gain of 6.4 percent on the day as a whole.
The companies said in a statement that they would form a joint company to be known as Universal Communications Technology Hangzhou (UCTH) which will build phones first for China, the world's largest mobile market. UCTH will later expand into other international markets, the partners said.
The product lines of the venture will initially be built according to the international standard known as Wideband Code Division Multiple Access (WCDMA), the next-generation evolution from GSM, which is the world's most popular cellular phone design. UCTH will also support the Time Division—Synchronous CDMA (TD-SCDMA), a variant of GSM and WCDMA supported by the Chinese government under development by Chinese companies with help from German-based company Siemens.
Yasuo Katsura, president of Panasonic Mobile, said that the joint venture with UTStarcom will help it develop more cost-effective versions of the latest generation of voice and Internet phones, which are known as third-generation, or "3G."
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