Armed with ambitious plans for expansion, China’s ZTE Corp. is hoping by 2015 to become one of the world’s Top 3 players in the next-generation 4G wireless technology known as Long Term Evolution, according to an IHS iSuppli China Research Topical report from information and analysis provider IHS.
Revenue for ZTE in the first half of this year reached $5.8 billion, up a solid 28.6 percent from $4.5 billion the same time a year ago. Growth was more than double the relatively tepid 12 percent expansion posted during the equivalent period in 2010, and this year’s first-half increase was just slightly less impressive than the 40 to 50 percent surge the company regularly enjoyed from 2007 to 2009. In all, ZTE revenues have climbed nearly $7.4 billion during the last five years.
As China’s second largest telecom equipment maker after Huawei Technologies Co. Ltd., ZTE is among the world’s Top 5 major telecom network and service vendors—an elite roster that also includes Huawei, Ericsson of Sweden, Alcatel-Lucent of France, and Nokia Siemens Networks of Finland.
But despite ZTE’s rapid revenue growth in the fi rst half—second only to Ericsson’s 34.4 percent— its revenue lags behind that of other players in absolute terms. ZTE is last in revenue among the Top 5—after Ericsson’s $17.0 billion, Huawei’s $15.4 billion, Alcatel-Lucent’s $10.8 billion, and Nokia Siemens Network’s $9.6 billion. Considered in circles as only a Tier 2 network infrastructure vendor, ZTE might have an opportunity to catch up to the rest of the field. However, that can only happen if it maintains an average growth rate of 20 percent for the next few years, and if an entity like Nokia Siemens Networks— third in revenue growth behind Ericsson and ZTE, but currently going through restructuring like ZTE’s other rivals—sees an equivalent drop in growth rate to around 5 percent over the next three years.
With relatively limited opportunities in the near term for overtaking its infrastructure rivals, ZTE has pinned its hopes on bolstering its presence in Long Term Evolution, the next-generation 4G wireless technology now starting to be deployed in parts of advanced markets like Western Europe, the United States and Japan.
ZTE is investing heavily in the LTE equipment segment, with more than 4,000 research and development employees involved in LTE-related research programs. It plans to boost LTE equipment production capacity at a large R&D center in the northern city of Xian, one of China’s ancient capitals but a modern cosmpolitan city today of about 8.5 million. ZTE also claims to have contributed more than 1,500 LTE proposals to the telecom collaboration effort known as the 3rd Generation Partnership Project (3GPP), as well as 235 essential patents to the European Telecommunication Standards Institute.
CSL Ltd., Hong Kong’s largest mobile communications operator, was ZTE’s first commercial customer in 2009. Then in March this year, Hi3G Access AB—a mobile video communications company from Sweden—purchased more than 4,500 e-Node B base stations from ZTE to build the world’s first LTE dual-mode networks in Sweden, Austria and Denmark. By the end of June 2011, ZTE announced it had more than 6,000 LTE NodeB commercial contracts as well as in excess of 50 trial networks with leading operators. Moreover, ZTE has shipped approximately 100,000 LTE terminals to customers all over the world.
In addition to the above, ZTE has achieved significant 4G wireless equipment sales, including new LTE contracts with Hi3G, U Mobile of Malaysia, Megacom of Kyrgyzstan and Globacom of Nigeria. ZTE also has three LTE network expansion contracts with the aforementioned CSL, as well as Telenor Hungary and TeliaSoneria Uzbekistan.
Learn More > ZTE’s Aggressive Strategy to Expand Market Share