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Atheros to benefit from China's protectionist move

They say that when you have relations with an 800-lb. gorilla, you stop not when you want to, but when the gorilla does. My friends who have business relations in China say this more or less captures their experience, too. The Chinese government will announce that local organizations receiving funding from the Chinese Ministry of Information will have to buy wireless equipment based on an indigenous wireless network standard. Non-compliant vendors may find themselves unable to sell their wares in China.

One non-Chinese vendor who is not exactly worried about the decision is Santa Clara, CA-based Atheros Communications. The company has recently tweaked its WLAN chips to comply with the Chinese standard. "If we're the only [non-Chinese companies] who are compliant, then this will be a windfall," said Mark Hung, Atheros director of strategic marketing. Indeed.

China's native standard is WAPI (for WLAN Authentication and Privacy Infrastructure), and it is a competitive standard to 802.11i. Since it was developed by the Broadband Wireless Internet Protocol Standards group, it is also referred to as BWIPS. In 2003 the standard became mandatory for all local wireless systems, a move which triggered a trade dispute between the U.S. and China. The dispute was resolved--'suspended' would be a better word--in 2004 when China postponed the imposition of the standard indefinitely. I do not know the language, but perhaps in Chinese "indefinitely" means two years.

There is a debate in the WLAN equipment industry as to whether the Chinese government's decision is merely a strong suggestion or a suggestion one cannot refuse. Atheros' Hung says it is a strong suggestion; other vendors are less sanguine. What goes around comes around, though. It may well be the case that China's deviation from the 802.11i draft will hobble its ability to compete in the global wireless industry. Big hitters Intel and IBM dominate the high-end of the WiFi industry and both--and many other big players--are adamant in their support for 802.11i.

For more on China's move:
- see Rhonda Ascierto's Computer Business Review report

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