Datang Telecom Technology

Datang Telecom Technology Co., Ltd., commonly called Datang Telecom or DTT, is a Chinese state-owned telecommunications technology company headquartered in Beijing. It was established in 1998 by the China Academy of Telecommunications Technology, a research institution associated with China's former Ministry of Posts and Telecommunications. The company was created as part of a restructuring that allowed the research institute to retain its scientific role while establishing a commercial holding and operating vehicle. Datang Telecom was listed on the Shanghai Stock Exchange on 21 October 1998 under stock code 600198, becoming one of the earliest Chinese research-institution enterprises to be converted into a publicly traded company. The company became especially prominent during the development of China's mobile telecommunications industry. Through its relationship with the China Academy of Telecommunications Technology and Datang Telecom Group, Datang Telecom was closely associated with TD-SCDMA, a third-generation mobile communications standard developed in China and recognized internationally as one of the principal 3G standards. During the 2G and 3G periods, Datang Telecom was frequently grouped with Huawei, ZTE and Julong Telecom as one of China's leading domestic telecommunications equipment suppliers. Its activities covered telecommunications systems, network equipment, integrated circuits, mobile-terminal solutions and related communications technologies. TD-SCDMA provided Datang Telecom and its parent group with a strategically important technology position, but the standard's limited commercial performance created long-term financial and operational pressure. From 2009 onward, the company reported negative net profit excluding non-recurring items for more than a decade. It also accumulated substantial losses over the period following its 1998 listing. After consecutive losses in 2005 and 2006, the company's shares received special treatment from the Shanghai Stock Exchange in 2007. Datang Telecom avoided delisting after returning to profit through asset disposals, and the special-treatment designation was removed in 2009. The episode became part of the company's broader transition away from its earlier image as a major general-purpose telecommunications equipment maker. Datang Telecom subsequently expanded its presence in integrated-circuit design. In 2012 it agreed to acquire nearly all of Leadcore Technology, a chip designer associated with TD-SCDMA, together with Shanghai Uniscope Technologies and a related subsidiary. Leadcore became a central element of the company's mobile-chip and integrated-circuit operations, supplying solutions for 3G and 4G devices. In 2017, Leadcore entered a partnership with Qualcomm China, JAC Capital and Wise Road Capital to create JLQ Technology, a joint venture aimed at designing and selling chipsets for mass-market smartphones in China. The venture received Chinese antitrust approval in 2018. The ownership structure changed again in 2018. Datang Telecom Group was merged with FiberHome Technologies Group to form China Information and Communication Technologies Group, or CICT, a centrally administered state-owned enterprise. CICT became Datang Telecom Technology's ultimate controlling shareholder. Following divestments and restructuring, the company's business profile shifted toward security chips, integrated circuits and specialized communications rather than the broad telecommunications-equipment portfolio associated with its earlier period. Datang Telecom therefore occupies a distinctive position in China's communications sector: it combines a state-research heritage, participation in a nationally important mobile standard, public-market experience and a continuing role in specialized communications technology.

Datang Telecom Technology originated in the Chinese telecommunications research system. In 1998, the China Academy of Telecommunications Technology, a research institute descended from the former Ministry of Posts and Telecommunications, created Datang Telecom Technology during a corporate restructuring. The arrangement separated commercial operations from the institute's continuing research role while preserving a close relationship between the company and the state telecommunications research system. Datang Telecom was incorporated in Beijing on 21 September 1998 with the academy and thirteen other promoters. It was listed on the Shanghai Stock Exchange on 21 October of the same year under stock code 600198. The listing was notable because it represented an early conversion of a Chinese state research institution's commercial activities into a publicly traded enterprise. During the formative years of China's mobile-communications industry, Datang Telecom became closely associated with the China Academy of Telecommunications Technology and the Datang Telecom Group. The group held intellectual-property interests connected with TD-SCDMA, a third-generation mobile standard developed in China and subsequently recognized as one of the three international 3G standards. Datang Telecom's participation in TD-SCDMA gave it strategic importance and helped establish its reputation as a leading domestic telecommunications equipment company. Alongside Huawei, ZTE and Julong Telecom, it was often described as part of China's four major indigenous telecom vendors. Its activities included communications equipment, network systems, mobile technologies and related semiconductor development. The commercial limitations of TD-SCDMA later became a major source of pressure. The standard did not achieve the commercial success expected by its supporters, and Datang Telecom's business suffered as the market moved toward more competitive and widely adopted technologies. The company recorded recurring profitability problems and faced a prolonged period of financial distress. Losses in 2005 and 2006 led to ST special treatment on the Shanghai Stock Exchange from 30 April 2007. Datang Telecom remained listed after using asset disposals and other measures to return to profit, allowing the designation to be removed on 5 June 2009. Nevertheless, the company continued to report weak underlying profitability in subsequent years, with net profit excluding non-recurring items remaining negative from 2009 onward for more than a decade. The company also encountered regulatory and legal problems relating to disclosure and governance. Its 2004 annual report was found to have overstated profit, and the matter led to investor claims alleging false statements. A former director was separately sanctioned by the China Securities Regulatory Commission for insider trading. These episodes, together with the repeated loss-making periods and delisting concerns, added to the risks associated with Datang Telecom's public-company status. In response to changing market conditions, Datang Telecom placed greater emphasis on semiconductor design. In March 2012, it agreed to acquire a 99.36% interest in Leadcore Technology from its parent group. Leadcore had developed chips for TD-SCDMA and mobile communications, and its integration gave Datang Telecom a stronger platform in integrated circuits and mobile-terminal solutions. The transaction also involved Shanghai Uniscope Technologies and its subsidiary Qidong Uniscope Electronics. Leadcore subsequently expanded its work beyond 3G into 4G mobile-device chips and related solutions. In May 2017, Leadcore agreed with Qualcomm China, JAC Capital and Wise Road Capital to establish JLQ Technology. The joint venture was designed to develop and sell chipsets for mass-market smartphones in China, particularly devices in the lower-priced segment. Chinese antitrust authorities approved the venture in 2018. The arrangement illustrated Datang Telecom's effort to use its domestic semiconductor capabilities in cooperation with international and financial partners rather than relying solely on its earlier role in network equipment and TD-SCDMA. A further structural change occurred in July 2018, when Datang Telecom Group merged with FiberHome Technologies Group to establish China Information and Communication Technologies Group. CICT became a centrally administered state-owned enterprise and the ultimate controlling shareholder of Datang Telecom Technology. After a series of divestments and restructurings, Datang Telecom's business became more concentrated in security chips and specialized communications. Its later identity is therefore less that of a broad, top-tier mobile-network vendor and more that of a state-owned technology company serving focused communications and semiconductor markets. The company remains publicly listed, while its strategic direction reflects both China's state-owned enterprise consolidation and the continuing commercialization of domestic telecommunications research.

1. 2018CICT formed

   Datang Telecom Group merged with FiberHome Technologies Group to form China Information and Communication Technologies Group, Datang Telecom's ultimate parent.

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2. 2017JLQ Technology joint venture announced

   Leadcore entered an agreement with Qualcomm China, JAC Capital and Wise Road Capital to establish a smartphone-chipset joint venture.

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3. 2012Leadcore acquisition agreed

   Datang Telecom agreed to acquire a 99.36% stake in Leadcore Technology and related Uniscope businesses, expanding its integrated-circuit operations.

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4. 2009ST designation removed

   The company returned to profit through asset disposals and had its special-treatment designation removed on 5 June.

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5. 2007ST special treatment begins

   After losses in 2005 and 2006, the company's shares entered the Shanghai exchange's ST special-treatment regime.

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6. 1998Company established during CATT restructuring

   The China Academy of Telecommunications Technology established Datang Telecom Technology in Beijing as a commercial company alongside the academy's continuing research activities.

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7. 1998Shanghai Stock Exchange listing

   Datang Telecom Technology was listed on the Shanghai Stock Exchange under stock code 600198.

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State-owned Chinese telecommunications technology and integrated-circuit supplier focused on security chips, specialized communications and technologies derived from domestic mobile-communications research.

• TD-SCDMA telecommunications systemsMobile communications infrastructure

  Datang Telecom was closely associated with TD-SCDMA through its parent research group and participated in the development and commercialization of equipment and related technologies for the Chinese 3G standard. The technology was strategically important because it represented a domestic contribution to the international 3G framework, although its limited commercial performance later contributed to pressure on the company's broader equipment business.

• Leadcore mobile communication chipsetsIntegrated circuits

  Leadcore became the principal semiconductor platform in Datang Telecom's integrated-circuit business after the company agreed to acquire most of the chip designer in 2012. Its work included chips and solutions for 3G and 4G mobile terminals, extending Datang Telecom's activities from network equipment into device silicon and mobile-platform technologies.

• Security chipsSecurity semiconductors

  Following restructuring and divestments, security chips became one of Datang Telecom Technology's principal business areas. These products represent the company's later concentration on specialized semiconductor applications rather than the broad telecom-equipment portfolio associated with its earlier TD-SCDMA period.

• Special-purpose communications solutionsSpecialized communications

  Datang Telecom's post-restructuring portfolio includes communications technologies and systems designed for specialized or dedicated applications. Public reference material identifies this area as a continuing business focus but does not provide enough detail to specify individual product families or customer programs.

• 2018Join the CICT state-owned enterprise structureM&A

  China consolidated major telecommunications technology assets and research-linked enterprises into a larger centrally administered group.

  What changed. Datang Telecom Group merged with FiberHome Technologies Group to create China Information and Communication Technologies Group.

  Aftermath. CICT became Datang Telecom Technology's ultimate controlling shareholder, while Datang Telecom's operating focus shifted toward security chips and specialized communications.

  CICT registered capital. 30 billion yuan (2018 formation)

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• 2017Establish JLQ Technology with Qualcomm and investment partnersM&A

  Datang Telecom aimed to commercialize mobile-chip capabilities in China's mass-market smartphone segment.

  What changed. Leadcore signed an agreement with Qualcomm China, JAC Capital and Wise Road Capital to establish JLQ Technology for chipset design and sales.

  Aftermath. The joint venture received Chinese antitrust approval in 2018 and targeted smartphones priced around the lower end of the mass market.

  Registered capital. 2.98 billion yuan (2017 agreement)

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• 2012Acquire Leadcore Technology and related Uniscope businessesM&A

  Datang Telecom sought to strengthen its semiconductor and mobile-terminal activities as the commercial outlook for traditional telecommunications equipment and TD-SCDMA weakened.

  What changed. The company agreed to acquire a 99.36% interest in Leadcore Technology, together with Shanghai Uniscope Technologies and its subsidiary Qidong Uniscope Electronics.

  Aftermath. Leadcore became the core of Datang Telecom's integrated-circuit business, supplying 3G and 4G mobile-terminal chips and solutions.

  Valuation of 99.36% Leadcore stake. 1.627 billion yuan (March 2012)

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• 2007Use restructuring and asset disposals to avoid delistingStrategy

  Consecutive losses in 2005 and 2006 caused the Shanghai Stock Exchange to place the company under ST special treatment and created a risk of delisting.

  What changed. Datang Telecom used asset disposals and a return to reported profit to regain normal listing status.

  Aftermath. The ST designation was removed on 5 June 2009, although the company later continued to experience prolonged underlying losses.

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• 2004Profit overstatement in annual reportControversy

  Datang Telecom's 2004 annual report overstated profit by 37.18 million yuan. The disclosure issue prompted investor lawsuits alleging false statements.

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• Former director sanctioned for insider tradingControversy

  A former Datang Telecom director was sanctioned by the China Securities Regulatory Commission for insider trading. The case was described as one of China's early insider-trading civil compensation matters.

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• 2018Datang Telecom Group becomes part of CICT

  Datang Telecom Group merged with FiberHome Technologies Group to create China Information and Communication Technologies Group, which became Datang Telecom Technology's ultimate parent.

  M&ALeadership change
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• 2017Leadcore partners with Qualcomm and Chinese investment firms to create JLQ Technology

  Leadcore signed an agreement with Qualcomm China, JAC Capital and Wise Road Capital to establish a joint venture focused on smartphone chipsets for the Chinese mass market.

  M&AProduct launch
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• 2012Datang Telecom agrees to acquire Leadcore Technology

  Datang Telecom agreed to acquire a 99.36% interest in TD-SCDMA chip designer Leadcore Technology, together with Shanghai Uniscope Technologies and a related subsidiary, strengthening its integrated-circuit business.

  M&A
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• 2009ST designation is removed after a return to profit

  The company avoided delisting after using asset disposals to return to profit, and the special-treatment designation was removed on 5 June 2009.

  Regulation
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• 2007Datang Telecom enters special treatment after consecutive losses

  Following losses in 2005 and 2006, the Shanghai Stock Exchange placed Datang Telecom shares under ST special treatment, creating a delisting risk.

  BankruptcyRegulation
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• 1998Datang Telecom Technology is established in Beijing

  The China Academy of Telecommunications Technology established Datang Telecom Technology as a commercial company during a restructuring of the research institute and its related business activities.

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• 1998Datang Telecom Technology lists on the Shanghai Stock Exchange

  The company became publicly traded in Shanghai under stock code 600198, making it one of the first Chinese state research-related enterprises to be restructured as a listed company.

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1. Datang Telecom Technology