Northern Telecom Ltd has laid out its plans to become the largest supplier of telecommunications equipment in China. The company plans to set up a large-scale research and development, manufacturing, sales and service organisation for its DMS SuperNode range fo switches, along with semiconductors and other technology. Four deals with Chinese partners call for a total investment from Northern of over $130m in the next five years, on top of the $100m the company has already put in; however, the Canadian government is to provide $200m. The deals form the first phase of initiatives covered by a Memorandum of Understanding signed by Northern and the State Planning Department of China last June. The joint venture – which has not yet been named – is being established with four Chinese business partners: Guangdong Posts & Telecommunications Administrative Bureau, China National Posts & Telecommunications Industry Corp, Guangdong Shunde Telecommunications Electronics Group Corp and China Tong Guang Electronics Corp. Northern Telecom will have a 40% interest in the company, with the remaining 60% shared by its joint venture partners. The new company is expected to be formally registered this autumn, following final contract and governmental approvals. Production is expected to begin in late 1994 – with a target production of 2m lines per year – and will primarily supply the Chinese market. The joint venture expects to employ around 2,000 people. Northern Telecom is also to share ownership of a VLSI chip manufacturing plant in Shanghai. The existing micro-chip production facility, Philips Semiconductor Corp of Shanghai, is currently owned 51% by Philips Electronics South-East Asia Holding BV and 49% by Chinese partners Shanghai No 7 Radio Factory, and Bank of China Shanghai Trust & Consultancy Co. The Canadian will buy a 25% equity stake in the company this summer. And, as well as its initial investment, Northern has also pledged additional investment to build a new CMOS and BiCMOS production line and expand the plant’s existing bipolar circuit production line. This will bring production up to more than 150,000 wafers per year. Finally, Northern also said Beijing University of Posts & Telecommunications and Bell-Northern Research are establishing a telecommunications research laboratory in Peking, to work on technology specific to the Chinese market. Initial projects will focus on wireless telecommunications research, software development, and test automation tools. Construction and provisioning of the new facility is already under way and the new laboratory is expected to become operational within a few months.
