Nokia Oyj, the world's largest cellphone maker, plans to sell handsets in China based on Qualcomm Inc's technology as it seeks to close a gap with leader Motorola Inc in the world's biggest mobile market.
Finland's Nokia was ranked second in cellphone sales in China last year and the company plans to supply "low-priced" code-division multiple access phones to China United Telecommunications Corp in May at the earliest, said Zhang Changjiang, a specialist at Nokia's product division in Beijing.
The two companies held "initial talks," China United Telecommunications Corp Marketing Director Li Weichong confirmed.
Enlisting Nokia as a supplier of CDMA phones may put further pressure on Samsung Electronics Co, Motorola and other man-ufacturers to drop handset prices, which have already fallen by half.
Nokia at present makes phones in China based only on the global system for mobile communications standard.
"Nokia wants 40 percent of the global handset market," Zhang said.
"How can we achieve that goal without getting into CDMA in China?" Zhang said. He wouldn't say how much the phones will cost.
China United is China's second-largest cellular carrier and operator of the country's only network using the Qualcomm technology.
China United plans to make CDMA service available on prepaid cards from next month in an attempt to recruit low-income earners, who prefer such cards because they don't need to pay monthly subscription fees.
The company is aiming for 13 million new CDMA users this year, making it an attractive customer for Nokia, which sold 11 million phones in China last year.
Prices of CDMA phones in China have on average dropped by half in the past year because Eastern Communications Co, TCL Mobile Communication Co and other local makers increased production.
A Samsung A399 CDMA phone costs 2300 yuan (US$278) in Beijing, down from 4800 yuan a year ago. Still, that's expensive to Unicom's CDMA subscribers, who on average pay US$18 a month, a quarter of what users spend at NTT DoCoMo Inc, the world's second-largest mobile-phone company by sales.
Nokia has about 10 percent of the CDMA phone market worldwide and controls about half of the market for GSM, the standard in Europe and China's dominant standard. China has 216 million cellphone users, barely one out of five people.
Shares of Nokia, which trade in Helsinki, fell 88 cents, or 6 percent, to 13.91 euros yesterday. Shares of China Unicom Ltd, a unit of China United, dropped 2.6 percent to HK$4.725 at 2:39pm in Hong Kong.
Nokia made 32 million phones in China last year, about a third of which were sold in the country, according to Beijing-based Norson Telecom Consulting.
Motorola manufactured 37 million phones in China last year, and sold half of those domestically.
In China, Nokia makes GSM phones in factories in Beijing and Dongguan, a booming industrial city in southern Guangdong province.
The company isn't among 19 manufacturers licensed by China's Ministry of Information Industry to make CDMA handsets.
It must seek regulatory approval, or partner with one of the licensed makers.
Zhang Qi, director of the ministry's products division, which is responsible for approving licenses, said she hasn't heard of any Nokia application.
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