$30 Million 3G Investment Shanghai

ASIA : Shanghai is going to become the second production location worldwide for W-CDMA technology from Siemens. That’s why the company is investing US$ 30 million to expand the Shanghai Siemens Mobile Communication (SSMC) factory.

This was announced Lothar Pauly ( inset ), Boardmember of Siemens Information and Communication Mobile (Siemens mobile) at a press conference in Shanghai marking the tenth anniversary of SSMC. Pauly stressed that Siemens mobile intends to assume the leadership role in the Chinese market for Third Generation (3G) mobile communication. The prerequisites for this are outstanding, he said: The company has put the first W-CDMA networks into commercial operation in Europe and is one of the top suppliers worldwide. In China, Siemens is working together with Chinese partners to develop the local 3G standard, TD-SCDMA. Pauly views two contracts to expand GSM networks valued at a total of US$ 144,8 million as strengthening Siemens mobile’s good collaboration with the two Chinese mobile operators China Mobile and China Unicom.

China, the world’s largest mobile communication market with 234 million mobile phone customers, is presently paying close attention to Europe, where the first W-CDMA networks from Hutchison recently went into commercial operation in England, Italy and Austria. All of these networks were supplied by Siemens mobile together with partner NEC. Worldwide, there are already twelve W-CDMA networks up and running, seven of them from Siemens und NEC. Some one million mobile phone users are communicating over W-CDMA technology built by the partners. To date, they have signed 24 W-CDMA agreements worldwide and have supplied 20,000 base stations, making them the front-runners in this field.

And now, China is going to become the second production location for W-CDMA technology from Siemens mobile in addition to Germany. Today, the base stations are being manufactured at Siemens’ German factory in Durach. Siemens mobile is therefore investing US$ 30 million to expand manufacturing capacities in Shanghai.

In addition to W-CDMA, Pauly announced, the Chinese 3G standard, TD-SCDMA, will continue to be moved forward as well. Together with Chinese partners, Siemens has been developing this mobile communication technology, which is part of the UMTS family. Siemens is the only company who is able to supply TD-SCDMA technology today.

“This puts us in a unique position in China that none of our competitors can match. We bring to the table experience from Europe in building W-CDMA, as well as an understanding of Chinese mobile communication needs,” said Pauly. He pointed to the tenth anniversary of joint venture SSMC, which Siemens Limited China formed in 1993 as the majority shareholder together with three Chinese partners. Since then, the joint venture’s workforce has grown from 50 to its present strength of 2,600 people. Today, SSMC is Siemens mobile’s strategic production center for Asia. The mobile communication technology that is being manufactured there ranges from infrastructures to modules and applications right through to mobile phone handsets. Fourteen million mobile phones a year are rolling off the production line there.

“Today, SSMC is also of strategic importance as a development facility: 350 developers are working there on the Siemens mobile communication technology of tomorrow,” said Peter Borger, the president of the joint venture. SSMC has also been participating in China’s economic boom: Over the course of the past ten years, sales have doubled nearly every year. In fiscal 2002, SSMC generated sales of € 1.2 billion (RMB 12 billion), thus making a major contribution toward Siemens mobile’s business in Asia. Some 20 percent of total sales come from this region. To achieve the stated objective – 3G leadership in China – SSMC will also be making a major contribution in connection with W-CDMA and TD-SCDMA, Lothar Pauly announced.

As a supplier to Chinese mobile operators China Mobile and China Unicom, Siemens mobile is building upon longstanding relationships. Networks in the rapidly growing Chinese mobile communication market are presently being expanded on a regular basis. Both of these operators have contracted with Siemens mobile to expand their networks: Siemens is supplying GSM mobile communication technology valued at US$ 144,8 million to six of the operators’ branch locations in various regions. The networks are scheduled to go into operation in late 2003.