The recent news that the China-based TD-SCDMA IC design house Commit will cease operations at the end of April 2008 after failing to gain revenue for its TD-SCDMA venture deals a severe blow to the TD-SCDMA community, particularly when TD-SCDMA is yet to take off.
Commit is one of the few successful companies with a full-blown dual mode TD-SCDMA/HSDPA chipset solution. In fact, handset companies such as LG, Ningbo Bird, DbTel and Lenovo showcased the capabilities of Commitâ€™s dual mode TD-SCDMA/HSDPA solution with great success in last Octoberâ€™s PT/Expo Comm China in Beijing. Commit is also the only IC design house that participated in China Mobileâ€™s TD-SCDMA trials. With such rosy results, its cessation is totally unexpected. Industry players cite the Chinese governmentâ€™s indecisive stance on its 3G licensing and the delay of TD-SCDMA standard certification as the major contributors to Commitâ€™s failure. Most importantly, it does not have other product lines to supplement its TD-SCDMA investment.
Besides, Commit has a total of 17 shareholders, with mainland Chinaâ€™s investments accounting for 31.24% of the shares while foreign investments make up the remaining 68.76%. Potevio, Texas Instruments and Nokia collectively hold a 13.5% share of the company. It came as an even bigger surprise that Commit failed to persuade these heavyweight shareholders to pump in more money to sustain its operations. Internal sources reveal that shareholders are skeptical about the whole TD-SCDMA landscape after such a long wait. Other TD-SCDMA IC players such as Taiwan-based MediaTek, Analog Devices, T3G, Spreadtrum, and Chongqing Chongyou Information Technology Co Ltd (CYIT) may also be on shaky ground with their TD-SCDMA ventures.
ABI Research believes that the Chinese government is unlikely to let this company collapse, as TD-SCDMAâ€™s success is a matter of national pride. Hence, we do not rule out the possibility of a takeover by other bigger mainland Chinese organizations such as Datang Mobile, Huawei, or even ZTE, to ensure continuation of TD-SCDMA IC production. However, and more importantly, the Chinese government must get its act together quickly to start the TD-SCDMA ball rolling, so as to raise the confidence of its investors.
Author: Hwai Lin Khor, Research Analyst, Wireless, ABI Research.