China link puts 3Com takeover in doubt
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US government extends investigation There is another cloud over Bain Capital and Huawei Technologies's takeover of 3Com - the US Congress committee into foreign ownership is extending its investigation into the offered buyout.â¦
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(InfoWorld) - Taipei may have to rethink its China investment policies in the wake of an offer by a foreign group to buy the world's largest chip assembly company, Taiwan's Advanced Semiconductor EngineeringÂ (ASE). Part of the attraction of the deal is that by changing ownership, the company would cease to be Taiwanese, and therefore be allowed to invest in China as it pleases, pundits say. The trouble for many Taiwanese chip makers in recent years has been the tight leash Taipei keeps on technology investment bound for political rival China. Taiwan and China remain enemies after splitting in 1949 amid civil war. The island fears China could use chip technology to bolster its military capabilities against Taiwan. Despite the strained relationship and tough investment rules, China remains by far the favored destination for Taiwanese investment due to their shared language and culture, and China's lower costs and huge potential market. The deal for ASE, a $5.5 billion offer from a consortium led by the private equity firm Carlyle Group, would be a huge positive for ASE, transforming it into a foreign entity and allowing it to build chip assembly plants in China, according to Fubon Securities. Currently, ASE has no chip assembly investments in China, despite the fact that earlier this year Taipei gave a green light to chip makers to invest in low-end chip assembly. Despite the apparent opening, not a single application has been approved by Taipei, and companies remain unsure of how to proceed with such investment. Analysts argue that the approval process remains very much subject to politics in Taiwan, due mainly to the rivalry with China. A foreign takeover such as the one Carlyle and ASE are discussing would remove such political pressures and put China investments on the fast track. Indeed, theÂ embattled former chairmanÂ of chip foundry giant United Microelectronics, Robert Tsao, was quoted by local media as saying the possibility of such buy-outs excited him, and that UMC would welcome similar offers. Tsao is a prime example of the difficulties Taiwanese tech companies and executives face when investing in China. He and another key UMC executiveÂ resigned early this yearÂ after beingÂ indicted by Taiwanese prosecutorsÂ over their alleged role in the establishment of Chinese chip maker, He Jian Technology (Suzhou). The court case is still being heard. The government began investigating UMC over He Jian a few years ago, and fined UMC for failing to apply for permission to work with He Jian. Taipei has also leveled fines on UMC and He Jian executives. Tsao and his colleagues maintain that they have done nothing wrong. For its part, the government plans to review the possible ASE deal over its potential impact on the Taiwan Stock Exchange, since the company would likely be de-listed if it is purchased by Carlyle. Economics Minister Chen Ruey-long on Monday said Taipei needs to keep on top of the issue in case it becomes a trend, because such purchases could have long term effects on the economic development of the island. The review has nothing to do with China policy, he said.
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China may dish out its first 3G  license as early as this month, a senior industry executive  said on Tuesday, as China Telecom  and Netcom   soared on hopes that Beijing would finally take the  leap after three years of false starts.
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The California network-equipment maker says the $2.2 billion deal to be acquired by a Chinese telecom won't proceed, because federal authorities reviewing the proposed sale said security issues can't be resolved.
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Yesterday China Herald tipped me that the Yahoo.com website (the English version) didn&#8217;t resolve. I checked, saw that it was true and thought I would check back the next day if the situation had changed.  At times these things happen here in China and it could have been a technical problem instead of a block. [...]
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Telecom executives are excited by the potential for 3G cellular networks in China, but the country wonÂt say which technology it will use or who will get licenses.
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Many telecommunications officials and some FCC officials cite BPL as a reason for deregulation. They say that three wired choices, plus wireless offerings, would guarantee that no company could gain monopoly power.
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By Virgil Larson, Omaha World-Herald, Neb.  May 25--DENVER -- Level 3 Communications Inc. is eyeing China as a market for the network and services it now sells across the United States and much of Europe.
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EBay Inc. will roll its China site into a joint venture run by a Chinese partner, a source said, in the latest example of a Western media firm ceding control of its China operation in the face of a tough market.
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By Li Weitao  China Mobile Communications Corp (CMCC), parent of Hong Kong- listed China Mobile Ltd, is expected to soon invite bids for a new round of network trials on the Chinese standard for third generation (3G) mobile communication, according to industry sources.
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Singapore Telecommunications Ltd. , Southeast Asia's largest phone firm, said on Thursday it was unsure if Vodafone plc's  stake in India's Bharti  was up for sale and that it was premature to comment on possible talks. "It is our objective to increase our stakes in existing associates at the right terms and conditions, and Bharti is certainly one associate we are interested to increase our shareholding in," Chief Financial Officer Chua Sock Koong told a media briefing.
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3Com makes a play for security. But is it enough for investors?
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Business & money: Global Radio refuses to rule out higher bid as it attempts to get the rival firm's shareholders on side
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U.S. wireless technology firm and  chip supplier Qualcomm Inc.  is talking to potential  Chinese partners to prepare for the launch of third-generation  services, but its chief executive questioned on Tuesday the  market prospects for a homegrown standard Beijing is pushing.
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(InfoWorld) - Networking equipment vendor 3Com is counting on low labor costs in China to help the company earn better margins on its products and compete against rivals like Cisco Systems, the company's chief executive officer said Wednesday. "There is one large player who is enjoying 68 percent to 70 percent gross margin on its products, while others are enjoying 40 percent to 45 percent gross margins," Edgar Masri, 3Com's CEO and president, said in an apparent reference to Cisco. However, the disparity in salaries between China and other countries creates an "arbitrage opportunity" for 3Com, he said. Arbitrage is the practice of exploiting price differences between two markets. While Cisco and others rely on expensive engineering talent in the U.S. and elsewhere, Masri is betting that cheaper labor costs in China will give 3Com an advantage, allowing it to price its products 30 percent to 40 percent lower than its competition. 3Com's strategy bears a striking resemblance to that employed by Chinese telecommunications equipment maker Huawei Technologies, which took advantage of lower costs in China to undercut its competitors and build a growing stake in the worldwide telecommunications market. Once a little-known Chinese company, Huawei is now a major player, having won deals across Asia and in Europe. The resemblance is not an accident. In March, 3Com acquired the remaining shares in H3C Technologies, aÂ joint ventureÂ the company set up with Huawei in 2003. As a result of that deal, 3Com acquired the 2,400 R&D engineers employed by H3C in China. The engineers help give 3Com an advantage over its competitors, Masri said, claiming that rivals' labor costs are up to five times higher than 3Com's.
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Is it too late to dial into profits with the leading Chinese telecom?
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Communications network equipment   maker 3Com Corp. COMS.O said on Thursday its quarterly loss   narrowed as revenues increased mainly due its joint venture   with China's Huawei Technologies Co. Ltd.