TD Forum Interview Series 10
Wu Ping from Spreadtrum: It is a Reasonable Decision Driven by Passion to Engage in TD-SCDMA

Bravely Admit the “Great Ambition”

Wang Jing: I am so glad to have you attend our TD-SCDMA Forum and the TD Top Interview sponsored by Sina.com. Congratulations to the successful of 2nd “Spreadtrum Technology Forum”. We can see that since joining the TD industry chain, Spreadtrum has experienced so much hardship but you are still strong enough to keep on going and now finally see the cheerful prospect of TD. So today let’s talk about some questions concerned by most of us and let our readers know more about Spreadtrum.

First of all, could you please tell us the about the development of Spreadtrum.

Wu Ping: Spreadtrum was founded in Shanghai and Silicon Valley in 2001 at the same time, and basically comprised of 2 groups of people, one group who had worked in domestic telecom industry and another group who came from U.S. telecom companies and had done a good job, at first there were only more than 30 overseas students. When 3G began to emerge in 2001, it was the time that Japan began to trial commercial use and 3G suddenly became very popular. So Spreadtrum decided to begin with 3G and WCDMA. But when we ran WCDMA, we found 2 facts, one is that WCDMA was very far from market operation and the other is that it would be better to do GSM than WCDMA because it was too difficult, then we switched to do GSM. But we mainly had 3G as our basic structure (including software and hardware structure) while doing GSM.

Wang Jing: How do you balance the work between Shanghai and Silicon Valley??

Wu Ping: At the beginning, Silicon Valley focused on chip designing and China on software. By and by, our chip designing business also migrated to China.

Wang Jing: So now the base is in China?

Wu Ping: Yes, now the development center of Spreadtrum is in Shanghai. Today we've already had more than 800 employee and made 2 mergers and acquisitions last year before and after we get listed - early last year we acquired the domestic digital television company Hongjing and earlier this year QUORUM which does RF chip. We’ve finished the whole process of changing from baseband software to RF then doing the complete set of wireless terminal solution.

Wang Jing: So do you have hardware, software, RF, base band all these things?

Wu Ping: Yes. Firstly, our structure is based on 3G; in addition, hardware and software are included together. Later, everyone knew Spreadtrum was quick to develop its 3G technology; and growth in 2G and HSDPA were also impressive. Our company size was not big in the beginning, but the structure was reasonable.
Secondly, our business model is a little bit different; our company is a local one, specialized in high-end components. Domestic business enterprise mainly focused on low-end in the past, we switched to high-end directly, and the high-end mode is always beyond others’ ability. Many things in the exhibition today are the leading ones in the world.

Wang Jing: The threshold is very high.

Wu Ping: Indeed.

Wang Jing: Today I saw your HSDPA wireless home gateway card, which has not been launched by any other manufactures.

Wu Ping: Exactly. Besides, the CMMB mobile television solution is exhibited today and the solution for the mobile phone if it loses the base station might switch to intercom mode, all these were initiated by us.

Wang Jing: I noticed it too. There is an Ad-hoc concept between mobile phones, form a network automatically after base station is lost, which plays a useful role in emergency.

Wu Ping: It completely can satisfy the circumstances like this year’s snowstorm disaster and earthquake, it also can be used in the Olympic venues.

Wang Jing: “Mobile phone used as the intercom”, does it mean mobile phones of same types, or with same internal chips?

Wu Ping: Currently it is meant to be used between the mobile phones based on Spreadtrum solution.

Wang Jing: It’s an interesting concept.

Wu Ping: I believe the “single chip dual SIM on stay” created by Spreadtrum is the first new technology around the world. We did a lot of things that others cannot do. Trough adopting one base band one RF, we achieved single chip double SIM on stay in the GSM network, it has obvious advantage compared to the market solutions that adopted two base bands and RFs.

Wang Jing: Come forward to TD on such basis. Today, we call on TD must take on GSM number, and can solve the consistency problem between the GSM and the TD numbers under the same operator. But through double SIM on stay may solve the problems among different operators.

Wu Ping: Solved the double SIM on stay is solved the problem of the operator. It can handle the complicated situation like Southeast Asia and India.

Wang Jing: It seems that your product design and structure are ahead of time.

Wu Ping: There are advantages and disadvantages. The good part is, we do have technicality, and we are ambitious in the development of technology, unwilling to fall behind others; on the other hand, it is too early to have the technicality. We are not the first one to adopt TD, but it is still early: it has been over five years since 2003, we should have a big breakthrough, and make comprehensive supplement to domestic industries, but from the view of business and market operation, we haven’t got any true earnings.

Wang Jing: It is the early historical phenomenon of TD.

Wu Ping: That’s true.

Wang Jing: It will be better in the future.

Wu Ping: I believe, as China is paying more and more attention to technology, innovation, and intellectual property rights, this ambition will pay back.

Wang Jing: Chances only knock on the door of he who is fully prepared. I watched Spreadtrum’s exhibition, and heard some speeches, I feel that Spreadtrum has great perspective, and many fresh concepts. Some are not difficult to implement, but difficult to think of.

Wu Ping: The biggest advantage of Spreadtrum is we are hoping to use the globalized resources, e.g. domestic company acquiring foreign companies, we were not in the big market, but in a very niche market to merge and acquire a foreign company, this made our globalization very outstanding, in addition, Spreadtrum team has international background in itself.

Wang Jing: Could you please introduce yourself? When did you go to America?

Wu Ping: I went abroad in 1991, after a while I came back, and stayed for a year, then went to America again.

Wang Jing: Did you work in other companies before creating Spreadtrum?

Wu Ping: Yes, I did. When I arrived in America, I worked for a start-up company which deal with image processing, i.e. simulated digital mixed circuits, etc.; the second one was an early start-up, it was merged later. The third one was an independent start-up.

Wang Jing: I heard that in your team, technological talents are very outstanding.

Wu Ping: Yes, we have four teams; they are comparatively outstanding, but not extremely outstanding. At that time there were 30 people in different companies in America, all having over 10 years’ experiences, and they are elites in the industry. So the teams became very strong when they work together. Investors think our team are too luxury, there is an old saying “if two men ride on one hose, one must ride behind”, we are not only 4 tigers, but more than 30. Four teams all consists of doctors, including the current vice-president, and myself. I am a local doctor, our assistant CEO Li Liyou is a doctor. And the marketing vice-president Kang Yi and product vice-president Cao Qiang are doctors respectively. This is also true for the two branch offices abroad, there are three domestic ones that located in Beijing, Shanghai, and Shenzhen, this distribution gives the whole team a comparatively broader view, and they have a better foresight when they get together.

Devote to TD: 2G supports 3G

Wang Jing: What’s the initial motivation that pushes you devoting to TD-SCDMA?

Wu Ping: In my opinion, there are two reasons, a rational reason and an irrational reason, for us to devote into TD-SCDMA. The rational reason is that we have done some researches in 3G technology. Our company was established in 2001. TD standard was accepted by the mobile telecom industry in 2002. As TD had become a standard, we found that the standard is useful. So we invited experts and professors from Datang to give lectures to us. At the same time, we persuaded the Board of Directors to do TD. Because we found that TD is very good in professional technology. We stopped WCDMA and switched to TD. I think it is reasonable.

Wang Jing: Have you made market evaluation?

Wu Ping: It was very venturesome to make the market evaluation at that time. We started our TD business since 2003 and it was in low tide period. There was no hope for TD technology. Both ZTE and Huawei did not input resources into TD. Generally speaking, we were running a big risk at that time. However, the biggest reason was that our team had done an excellent job in GSM. We have many advanced technologies. We have confidence in our TD project. In addition, we are Chinese and we all should do something for our country. We could do it as the opportunity was here. We would regret if we did not do it. TD is Chinese own mobile telecom standard. We would try our best to do it.

Wang Jing: There are many people and companies that developed TD technology driven by their passion. In fact, we all had no guarantees. The government did not provide explicit policy and the market future remained ambiguous.

Wu Ping: The greater the responsibility is, the more passion it requires. If the responsibility is normal and riskless, it is not significant either.

Wang Jing: The higher the risk is, the more the profit would be. It might be the same as buying stocks. (Laughing)

Wu Ping: We did not pay attention to economical interest at that time. We just thought that TD development might be a long process, about 3 years. However, we did not know it would be such a long path. In fact, we had spent much unnecessary time during TD R&D process. On the other hand, we’ve got great support from GSM. Our performance in GSM is very good and it can support us to do TD continuously.

Wang Jing: It is the characteristic of Spreadtrum. Spreadtrum development model is developing TD with the support from GSM. It is different from other chip manufacturers, such as Kaiming which has disappeared now. Many readers want to know why Spreadtrum could keep 20% market share under the drastic market competition. It is really a very good performance.

Wu Ping: From the bottom of my heart, the GSM baseband chip companies on the world were all very powerful when I entered into this field. If we decided to do this industry, we must be brave enough to undertake all the difficulties. During many years development, Spreadtrum has mastered baseband chip technology totally. While other oversea companies, including Intel and other 5-6 world top 10 companies, had given it up. My deepest impression is that no matter how strong other competitive companies are, the company itself must be full of strength. We must compete with them in GSM chip field. At the same time, we had to pay more attention to TD technology. If we did not research and develop TD technology, we can response to the competition in GSM at leisure! 50% of our human resource worked on the R&D of TD. It means that we have to sustain 50% employees that do not make money at that time. It was really a very difficult decision. Another more difficult factor was that we were a small company at that time. We are the only public company working on baseband chip on the world. It is very difficult for us to compete with other bigger companies. The market share of Spreadtrum in GSM baseband chip field was 10% in 2006. According to the existing material, our market share increased to 20% in 2007. We competed with many powerful competitors during the process. We get this delightful performance today. I think we can be more powerful if our performance in TD development is much better, like a tiger with two wings. Although we have some achievements in TD now, we are still slower than normal development as government policy was not clear before.

Wang Jing: The government policy is quite clear now, or, it is very clear now. The only obscure thing is when the license would be issued. I hope the time is near.

We Welcome the Competitive Situation of TD-SCDMA

Wang Jing: Let’s talk about the next step. I noticed that the theme of this “Spreadtrum Technology Forum” is “Collaboration Creates Value”. With the clear prospect of market situation and the commercial use of TD-SCDMA, it is expected that there would be much more fierce competition on the market of TD-SCDMA. Everyone wants enter the market successfully. What strategy do you think Spreadtrum will have for the next stage?

Wu Ping: First of all, I want to make it clear that we welcome a competitive situation on the market of TD-SCDMA. The current situation for TD is that there hasn't been sufficient competition in many factors. At this stage, competition will bring about more productivity. We are not afraid of competition because we’ve always been expecting a situation of competition, and such was true for GSM. We survived in that tough environment; TD is much easier for us than GSM. We can only get strong with good competitor. If you play chess with a world champion, you will become a chess master sooner or later. If you always play chess with a newbie, you’ll always remain a newbie.

So I think the theme “Collaboration Creates Value” comes out of such environment. There would be abundant applications on such a good network as 3G, even much broader than ADSL bandwidth. How do you incorporate those services on a chip, is the biggest problem for this industry. In such environment, the industry chain in China should have a strategic cooperative spirit. Or 3G will only be an empty box without any content. This has been proven by the experiences from other countries.

Wang Jing: Now we are facing the problem of how to enter the market and be accepted by the consumers. Operation is only an aspect. As to application, there is a cruel threshold. This needs the effort from the whole industry chain rather than only the operator at operation level. The whole industry chain shall be prepared for that on the level of product supporting structure.

Wu Ping: Actually GSM faced differentiated issues too; such issue gets more challenging for 3G. But this is good news. People will only think about this issue when there is something like 3G. No one will think about it if there is no 3G at all.

Wang Jing: As 3G is looming, do you think all related parties are clear about that?

Wu Ping: I think all parties should think it over. If China Mobile is not on the trial commercial use, people will not think about this issue. As China Mobile is experimenting, all parties would be willing to think about is more thoroughly. All content providers ought to think about this, or it won't have a clear future. 3G will launch a huge transition of the industry chain in China. This is the first time that China engage in high-tech in telecommunications and the first time that we have a complete industry chain. We have everything in it and we haven't integrated thoroughly. How do we do that? Let see how Chinese people will do it. If we do it well, we’ll be leading the world, or we would fall behind for some more time. But I don’t think we should ever give up. There is opportunity with 3G, and many excellent companies will emerge with 3G.

Wang Jing: 3G is not an opportunity only for China, but a last chance for world telecom industry. If 3G doesn’t prevail in China, I think there would be serious consequences. If that happen, what do we strive for, what does the technology develop for? If the market can’t get mature, isn’t the technology problematic? So, I think the responsibility of Spreadtrum and the whole industry chain is more challenging that we supposed.

Wu Ping: In recent years, as the development of TD-SCDMA in China, we’ve been very willing to take our responsibility. We’ve done TD-SCDMA chip; we’ve done the AVS chip of China. We can say the incorporation of AVS into CMMB chips is also done by us. We all support the standard of our nation. I think Spreadtrum has made significant effort. In another sense, I don't mind Spreadtrum taking even more social responsibility in the future. However, there is some duty that is too heavy for a single company to take, for example those at policy level and that of the will of the State. The government shall undertake to make effort, because no single company could do that. Things are not like that even in liberalistic countries. Having something to do with the development of the nation, the government shall undertake the responsibility and do its job. That’s how Chinese enterprises could take its own responsibility and do their own part of job.

Wang Jing: The government should have a general strategy.

Wu Ping: Yes. There needs to be a commander in any battle. In the industry chain, only one company could not serve as a commander. If one company acts like a commander, there must be some problem.

Wang Jing: In the TD-SCDMA industry chain, all the companies are willing to service the country. But the problem is you can’t let them do it without a direction or guidance. There will not be a success, only efforts in vain. This is what I’ve been concerned with. The good news is our sky is clear right now.

China Mobile will definitely push TD-SCDMA painstakingly, and I think Spreadtrum is ready too. As to the performance requirements and other demands from China Mobile, is Spreadtrum ready?

Wu Ping: I think we are ready for everything that is needed by China Mobile in its trial commercial use stage. For example, today we say the standby current is high in our terminals, but that’s because the network is not yet perfect. If the reception quality is good, our lab test has shown that the standby currents for TD and for GSM are of the similar level. Secondly, as we are currently using 384K network, we can provide almost all the functions that can be realized on 384K network, video call, streaming, and data cards, all included. And higher level functions can’t be realized on that. China Mobile is going to upgrade to HSDPA, and HSDPA can reach 1.6M as the gateway test shows. We are almost going simultaneous, even more advanced. We are ready even for dual-mode switching. I don't believe a soldier on the drill can easily adapt to the situation of a real war. What would a real market operation be like? We tell ourselves everyday that we are ready. However TD will not stay in trial commercial use or testing mode for ever. A soldier on the drill cannot beat others on the battlefield. This is the first point.

Secondly, the operator will only demand for network contents when the competition begins for TD-SCDMA. And today people can't easily by a TD cell phone, how do you know what the public need? There needs to be a transition, I think we should make TD cell phones available to the public as soon as possible.

Wang Jing: Yes, we are entering into real battle. TD technology has been tested time after time. One reason might be it costs too much to fail, and second, the public is much particular than before because there is comparison with a complete and mature 2G network. If TD-SCDMA is not well planned on the first stage, it might begin have a bad start.

Wu Ping: That’s right. No matter for China Mobile or for the industry chain, I think promotion is badly needed to let people know what is 3G, and what will the beginning of 3G be like. There is not a single network that started perfectly, including GSM. Now the TD network is good enough. On the other hand, people being picky could push us solve the problem as soon as possible. You should do our business rather than blame the public. If people begin to deploy WCDMA network elsewhere, I think the beginning would be like what TD is right now. It won’t be as good. CDMA is also a mature standard from abroad, and the network hadn’t been perfect after long time of construction and much investment. So, it is more a stage faced by all newly initiated networks than a problem of TD technology per se.

Wang Jing: So we should set people’s hope and expectation to an appropriate level.

Wu Ping: In the industry opinion, if China Mobile and other decision making organizations could be smart enough, the company/organization that researched and developed TD technology must be a national hero. Both the Chinese government and people will support it. It is sure that Chinese people will support their own TD technology. What’s more, China mobile communication industry will support it too. The company/organization must make a good plan and keep its stable developing rhythm. The unlimited push should be avoided. We should not pay all the attention on R&D work. If we set the net as 1.1M and develop a very stable HSDPA net, we can exceed oversea WCDMA net in a step only.

Wang Jing: China Mobile had a great opportunity in advance.

Wu Ping: It can bring 3G with a great opportunity in advance. While it will be difficult to provide end user with lots of contents in such a small screen on mobile phone.

Wang Jing: As we’ve felt that Spreadtrum is facing a choice to TD. Then it brings my last question: How about the decision of Spreadtrum to go ahead in current TD field?

Wu Ping: We faced 2 choices at that time. The first one is whether we continued to research and develop TD technology. If the government policy and TD operator is not explicit in a long time, we might adjust our strategy. We might transfer some attention from TD to other field. Luckily, TD is in a very good situation now as its commercial future is very bright. All the companies working on TD industry chain are very excited for the enthusiasm from all related parts including government and operators. We have actively made much effort on TD recently. As you can see, we developed both HSDPA mobile phone solution and data card solution. We can provide data card product during the Olympic Games and the introduction of cell phones might be slightly later as the HSDPA has just upgraded this month. It is the order of nature. However, as it is a long time solution, neither a short time competition for China Mobile nor a competition to Olympics Games. In a word, we will accelerate, not decelerate, in TD R&D work.

Wang Jing: Currently, Spreadtrum is in a high speed developing period in TD technology. I hope the general development environment will be better and better and operator could make much greater achievements. As a result, the whole industry chain can have benign circulation.

Wu Ping: In this way, companies would be happier in operating their business.

Wang Jing: We can realize sustainable development in this way. The good performance of TD is a precondition of 3G development. Good performance of 3G is the precondition of LTE development.