China Mobile to Focus on Data Cards for TD-SCDMA Development

Handset manufacturers have confirmed that China Mobile (NYSE: CHL; 0941.HK) will not procure more TD-SCDMA handsets before the end of the year, and that the company is concentrating on developing TD-SCDMA Internet access cards. China Mobile is also shifting the focus on future 3G services towards Internet access services delivered across TD-SCDMA. Handset services will be delivered primarily using 2G/3G dual-mode handsets.

A knowledgeable source claims that China Mobile plans to have 400,000 TD-SCDMA mobile users by the end of the year. The company has already procured 300,000 TD-SCDMA terminals, and has another 50,000 to 60,000 waiting in inventory. This means the company has no need to conduct further large-scale handset procurements. This same source claims that the temporary adjustment in the company's developmental focus for 3G is "directly related to the lack of maturity of TD-SCDMA terminals."