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The world's sixth largest semiconductor maker, Infineon Technologies, has joined with Chinese telecom network giant Huawei Technologies to make a low-cost mobile phone platform for third generation (3G) mobile telecom systems, marking another major step in the market's development in China.

"The biggest question is how we can stimulate the 3G market and our co-operation with Huawei aims to find a right approach for that," said Ulrich Schumacher, president and chief executive officer of the German semiconductor firm.

He explained in an interview in Beijing yesterday that the difficulties 3G has met so far in the world resulted from the fact telecom operators and equipment makers focus too much on the high-end multimedia and data applications market. It also meant its volume was quite small, and the rollout of the systems could not bring good returns for operators and equipment vendors.

Infineon and Huawei aim to build a mobile phone platform for wideband code division multiple access (WCDMA) system, a major 3G standard, and make the prices of the phones affordable to ordinary users with simple functions of voice communications and transmission of short messages.

Xu Zhijun, president of Huawei's wireless product line business, said most of the 3G phones in the world sell at a price of over 5,000 yuan (US$603). But the two firms are expected to bring the prices down to that of 2G phones, which is usually less than 2,000 yuan (US$240) in China.

He said both companies would inject about US$20 million investment into the project, and the first operational phone based on their platform was expected to come out in the middle of next year.

Infineon will be responsible for developing reference designs and protocol software for the platform, while Huawei will provide expertise in the WCDMA network, terminal testing and interfacing between phones and systems.

Schumacher, on his second visit to China this year, believed China would become one of its focused markets in the world.

He said in the next five years, 70 per cent of Infineon's investment will be made in Asia and China has always been a priority.

In this year alone, the company set up a testing and assembling facility in Suzhou in East China's Jiangsu Province and a research centre in Xi'an in Shaanxi Province.

The semiconductor giant is expected to announce the establishment of its China headquarters in Shanghai today.

As well, an agreement was signed yesterday morning with China's biggest computer maker, Legend Group, on co-operation for computer memory chips and wireless technologies.

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