Chinese modem dumping probe resurrected
Belgian modem maker Option may have come to a settlement with Huawei last year, but Chinese vendors are not free from European Commission scrutiny yet.
Another small European player, Germany’s 4G Systems, has taken up the baton, petitioning the EC to continue its investigation into claims of unfair subsidies provided by the Chinese government to Huawei and ZTE that enables the pair to undercut local suppliers of wireless modems.
The case is seen has having broader ramifications beyond the modem space, and will be closely watched by Europe's wireless equipment makers - Ericsson, Nokia Siemens and Alcatel-Lucent -, which have also been forced to engage in price wars with their Chinese rivals.
“Because of the increasing imports of WWAN modems from China and the decreasing prices for these products in particular within the last three years, 4G Systems lost a number of its main customers, e.g. T-Mobile, Vodafone, Orange, One Telenor,” 4G Systems states in its filing to the EC, Dow Jones Newswires reports.
It added that this had resulted in “significant” job cuts at its home base in Hamburg, as the firm was forced to move most of its manufacturing to Asia.
One of the resulting issues for the Commission will be whether 4G Systems has enough activity remaining in Europe to count as an EU supplier at all.
Option had spearheaded a probe into allegations of modem dumping by Huawei and ZTE, claiming the subsidies enabled the Chinese giants to squeeze its share of the European modem market dramatically, however it dropped the complaints when it formed a patents and manufacturing alliance with Huawei in October
The deal will see Option cooperate with Huawei on R&D projects, and could even lead to a joint development center being created in Belgium.
Option will gain software licensing revenues but will sell its chip unit to Huawei. The licensing deal was valued at €27 million for the first year, with a potential extension for up to €33 million over the next 18 months.
The Chinese giant agreed in principle to acquire Option's wholly owned semiconductor firm, M4S, for about €8 million.