China : Comtech Group announced that its customized module design solution has been chosen by ZTE Corporation, one of the world's top providers of telecommunications and network solutions, to the new TD-SCDMA 3G handsets. The newly developed handsets are dual module, meaning they will be able to support both new 3G TD-SCDMA networks and existing 2G networks in China.

Comtech has provided critical enabling technology for the phones, which are expected to be shipped to market by ZTE Corporation during the second half of 2007. The expected roll out of third generation networks in China this year, with the likely resulting increase in sales of 3G handsets - industry experts estimate there are more than 10 million 3G cell phones likely to be used in China on a trial basis ahead of the Olympic Games next year - means that Comtech is well positioned to capitalize on the growth in this sector.

The deal also underlines Comtech's unique position within the mobile communications industry value chain. Jeffrey Kang, President & Chief Executive Officer, Comtech Group, Inc., said, "Comtech's module technology solutions have long been accepted by companies in the 3G space overseas, such as Vodafone. The fact that the Chinese government plans to release 3G license in the near future, as well as having just accepted WCDMA and CDMA 2000 3G technology as standards in the country, is likely to support our sustainable growth over the coming years.

" "We are delighted that we are in a position both to grow our business in the third general mobile sector and to play a role in the development of 3G infrastructure in China, which will ultimately support the growth of China's mobile industry as a whole. On the back of this, together with our success in other areas, we expect to perform strongly throughout the remainder of 2007," said Mr. Kang. Recent studies indicate that the projected growth in the market for 3G handsets is expected to last for several years.

A study carried out by the China Academy of Telecommunication Research (CATR), an advisory body linked to the Ministry of Information Industry, estimated that there will be 198-266 million new 3G subscribers in China by 2013. Earlier this month, the company reported record quarterly revenue of USD 44.6 million, up 31.5% over last year's revenue of USD 33.9 million, with growth in all of the company's end markets - telecommunications equipment, mobile handset and digital media, which Comtech believes are among the fastest growing markets in China.