Dongle maker drops dumping complaint against Huawei; agrees R&D and licensing deal

Having loudly protested that Huawei was dumping its cut-price USB dongles into the European market, Belgium-based Option has suddenly asked the EU to drop a complaint it made against the Chinese firm in July.

This about turn comes after Option--Europe's only cellular dongle manufacturer, said it had struck a one year licensing deal for its connection manager software with Huawei in return for a royalty fee of €27 million. The licensing deal also has the possibility of being extended for 18 months at an additional €33 million.

In addition, the two firms said they had also agreed to co-operate on joint R&D projects, and that Huawei would in principle acquire Option's wholly-owned subsidiary, M4S--a developer of 4G RF chipsets--for around €8 million.

In return, Option has agreed to withdraw its anti-dumping and anti-subsidy complaints against the import of dongle modems from China, and it has petitioned the Belgian government and European Commission to cease any actions.

"The software license agreement is a big step forward in one of the key pillars of our strategy," commented Option CEO, Jan Callewaert. For Huawei, Tim Watkins, VP for Western Europe, said: "As we seek to expand our already significant R&D capacity in Europe, we recognise there are mutual benefits to gain from joint R&D. Huawei will continue to invest in Europe by collaborating with more local partners and sharing our innovative telecoms technology."

Soon after making its first complaint, Option released details covering the financial damage being done by the alleged dumping. During the first quarter of 2010 the company generated revenues of €13 million, compared to €50.8 million a year earlier and €76.8 million in the first quarter of 2008.

There had been industry rumours that some Chinese vendors had been allegedly duplicating Option's source code for use in their own cellular dongles. No proof of this was ever presented or proven.

Reports carried by Taiwanese newspapers expressed disappointment about the deal claiming that local vendors had originally hoped to cooperate with Option to compete against Huawei and ZTE in Europe.

For more on this story:
- read Rethink Wireless & Digitimes

Related stories:
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Nokia unloads wireless modem biz to Renesas for $200M
Sierra Wireless announces HSPA+ modems
3G Modem Market Shipments Scream, but Price Erosion Constrains Revenue Growth

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