Despite some initial roadblocks, Chinese technology companies are making inroads into the U.S. smartphone market.
Having roots in World War 2-inspired technologies, microwave and RF companies continue to be at the forefront of defense technologies in the U.S. Nevertheless, they have often found themselves losing market share—particularly with commercial products—to global firms in other industries.
For example, look at Europe’s initial dominance of much of the cellular-phone and wireless-infrastructure market. Japanese technology companies started buying up American interests and making inroads into technology markets in the 1980s. Now, markets are shifting again as Chinese companies increase their presence in the U.S.
Despite some success in the U.S. cellular and handheld market, Chinese companies (Huawei and ZTE, specifically) have lost momentum due to cyber-espionage warnings from U.S. lawmakers. Undaunted, some Chinese firms have simply opted to buy American companies instead. At the end of last month, the Lenovo Group announced an agreement to purchase Google’s Motorola handset division for $2.91 billion. In that same time period, Lenovo also revealed that it will buy IBM’s low-end server market for $2.3 billion.
Google has clarified that it will keep the bulk of Motorola’s mobile patents, allowing the firm to boost its smartphone software expertise in hopes of furthering the success of its Android platform. According to an article on Reuters, “Lenovo to buy Google's Motorola in China’s largest tech deal,” losing those patents should not disadvantage Lenovo to too great an extent: “The purchase will give Lenovo a beach-head to compete against Apple and Samsung Electronics as well as increasingly aggressive Chinese smartphone makers in the highly lucrative U.S. arena.”
Obviously, Lenovo is planning to make a strong entry into the smartphone market by leveraging Motorola’s strong reputation. Lenovo has already slipped rather seamlessly into the U.S. computer market after buying IBM’s PC division in 2005. With so much attention being paid to U.S. business deals with Chinese companies—especially in technology markets—it remains to be seen if both of these transactions will go forward with the required approvals. Clearly, however, American RF/microwave companies must adapt to a changing international market—both in the U.S. and abroad—as commercial customers and suppliers seek the best performance for the lowest price.
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