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Qualcomm gains from China cell phone deal

The company says its wireless technology will be used in a line of phones produced and distributed by Chinese firm China Unicom and a Chinese manufacturer.

Qualcomm said today its wireless technology will be used in a line of phones produced and distributed by Chinese firm China Unicom and a Chinese manufacturer, giving new spark to a relationship that has flickered on and off over the past few months.

The agreement falls well short of a relationship that once would have seen Qualcomm's technology adopted as a standard throughout much of China, but it does give the San Diego firm a more solid foothold in the critical Asian market.

The relationship with Chinese companies has been seen as a boon for Qualcomm's stock, given the enormous potential size of that market. Shares closed at $77, up $7.06 or 10 percent.

Much of Qualcomm's Wall Street roller-coaster ride in see story: Qualcomm stumbles past months has been tied to expectations about the company's future in China.

Early this year, Unicom, China's second-largest telecommunications provider, signed an agreement to create a national mobile phone network based on Qualcomm's CDMA technology.

But just a few weeks later, the company backtracked. Official word from Beijing came that the government was reevaluating its technology decisions and might select a homegrown technology instead.

Unicom is still using CDMA in at least one trial project, through a subsidiary network. No decision has been announced about its wider strategy, however.

Today's relationship is focused on the production and distribution of a new telephone that will be produced by Zhongxing Telecom Equipment and Unicom. The handset will support both CDMA and GSM, the most popular mobile technology standard in China today, and will be able to switch between the two.

"Our decision to deploy CDMA technology enables us to provide mobility according to the true definition of the word--(the) ability to move freely without boundaries," Zhang Fan, Unicom's general manager for mobile communications, said in a statement.

Qualcomm applauded the decision to distribute the handset, but said the deal didn't change the company's position in the Chinese market.

"Nothing has changed," said spokeswoman Christine Trimble. "This is continued positive news about CDMA in China."