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As China Mobile expands its TD-SCDMA network and drums up device support, the market for TD-SCDMA baseband chips is finally becoming an attractive one. With this in view, US private equity firm Silver Lake has acquired a minority stake in Spreadtrum Communications, a Chinese fabless chip company that trades on the Nasdaq exchange and specializes in GSM/TD-SCDMA chipsets.

The size of the investments, Silver Lake's first in a China-based company, was not disclosed. Eric Chen, managing director at the investment firm, said in a statement: "We believe Spreadtrum will be a key enabler of China's homegrown 3G national wireless standard, representing the power of technological innovation in the Chinese economy."

As the Chinese wireless silicon industry becomes a significant force over the coming years, Spreadtrum could find itself at the heart of a new ecosystem. It has survived the long wait for commercial TD-SCDMA, which saw the failure of other Chinese ventures looking to cash in on the 3G boom - notably Commit, which ceased operations two years ago despite having Nokia, Texas Instruments and Potevio as shareholders, and LG and Lenovo as early customers.

While wireless silicon majors, particularly ST-Ericsson, are beginning to make serious inroads into TD-SCDMA (STE has a wide ranging strategic alliance with China Mobile), this remains a fairly open market, albeit a one-customer one. Most tier one handset makers are only just launching their first devices for the standard - even Apple is said to be in talks with Mobile about a version of the iPhone.

So there are opportunities for Spreadtrum, especially as it has taken an early position in markets like the Chinese mobile TV platform, CMMB STiMi. It formed a partnership with UK RF chip designer Mirics last year to address that space. More recently, and significantly, it won a deal with Samsung for GSM and EDGE transceivers, for international handset models.

Like its biggest rival, Taiwan's MediaTek, Spreadtrum will need to diversify its business, particularly into more mainstream 3G flavors. It was founded in 2001 and has sometimes been rumored as a possible acquisition target for Broadcom.

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