Advanced Micro Devices Inc (AMD)

[sgolds]

Intel & China WiFi dispute - this article adds some interesting context on the topic. The US government sees this as the 'leading edge' of a series of trade disputes with China. Broadcom is also refusing to comply. Dell, surprisingly, capitulated to the Chinese - saying they will ship laptops into China anyhow using other WiFi solutions.

http://www.nytimes.com/2004/03/11/technology/11chip.html



Intel to Miss China Deadline on Standard for Wireless
By LAURIE J. FLYNN
Published: March 11, 2004

SAN FRANCISCO, March 10 - Intel took a hard line on Wednesday in a festering trade dispute with the Chinese government, declaring it would not meet China's June 1 deadline for adhering to its proposed new standard for wireless computing.

Intel, the world's leading maker of chips, said the Chinese standard presented substantial technical challenges that would prevent it from meeting Beijing's deadline. Company officials said that they had informed some of Intel's largest customers in China last week that they might need to find an alternate supplier of microprocessors if they want to keep selling wireless products in China after that date.

Intel's not meeting the Chinese timetable reflects a larger objection on the part of Intel and other American technology companies, which have been up in arms since China announced last year that it wanted to develop a separate national standard for short-range wireless networks, known as Wi-Fi.

Last May, Beijing told foreign makers of computers and microprocessors that want to sell Wi-Fi systems in China that they would have to use a different standard for encrypting the signals and work closely with Chinese computer makers to produce goods for the Chinese market.

Chinese officials had originally set Dec. 1 as the deadline, but late last year extended it to June 1.

American chip makers and PC manufacturers, joined by a number of other computer makers around the world, say that the Chinese plan amounts to an unfair trade barrier by requiring companies to comply with two vastly different standards. Foreign and American companies are also concerned about the potential loss of intellectual property rights if they are forced to work with Chinese PC companies that might become competitors in the Wi-Fi marketplace.

An economic counselor at the Chinese Embassy in Washington could not be reached for comment yesterday. But Chinese officials have said in recent months that short-term conflicts can be negotiated.

In raising the warning flag Wednesday, Intel couched its objections in technical terms. "We won't be able to build a part that meets our requirements for quality," said Chuck Molloy, a spokesman for Intel, which is based in Santa Clara, Calif. But Mr. Molloy said that Intel's problems with the Chinese standard were "philosophical" as well.

Broadcom, another American supplier of wireless chip sets for PC's sold in China, also said Wednesday that it would not make the deadline.

Dell, which sells PC's based on Intel's Centrino wireless chip set, said it did not foresee any disruption in sales of its notebook computers in China if Intel failed to comply with the Chinese standard, known as WAPI.

"We have multiple sources in China," said Cathie Hargett, a Dell spokeswoman. "We have alternatives for addressing WAPI compliance should it become necessary." She declined to provide any details about Dell's other suppliers.

The announcement from Intel came just one week after officials from the Bush administration delivered a letter to China's deputy prime ministers asking them to back off their standards plan. In the letter, Secretary of State Colin L. Powell, Commerce Secretary Donald L. Evans, and Robert P. Zoellick, the United States trade representative, urged China to work with Washington to resolve the dispute. The administration has not released the letter, but officials have confirmed that it concerns the Wi-Fi standard.

"The Chinese should feel very much the pointy end of the stick," said Rhett Dawson, president of the Information Technology Industry Council, a Washington trade group representing technology companies. "They're being told this is a dumb idea."

The appeal by the cabinet-level officers, followed by Intel's announcement that it would not meet China's deadline, suggests that the standards dispute is being seen by both Silicon Valley and Washington as the leading edge of a broad array of emerging trade disagreements with China. If China goes ahead with the wireless standard, Mr. Dawson said, it could establish a precedent encouraging Beijing to set more exclusive technical standards.

American executives and trade officials have expressed fears that such an approach could fragment global markets in high-tech products in what they consider a misguided protectionist attempt by Beijing to give Chinese producers an edge.

But some industry analysts note that powerful nations, including the United States, have long exercised power in the global market by setting technical standards. With its huge population and fast-growing economy, China, they say, is merely trying to take its turn as a standard-setter. If the dispute cannot be settled and Intel stops shipments of its wireless chips for PC's to China, the company stands to lose, at least temporarily, access to a huge market for its Centrino chips.

China is currently the second-largest market for PC's behind the United States, purchasing more than 13 million PC's last year, according to the market researcher IDC.