Europe could impose tariffs on Asian modem makers

17 Sep 2010

Following a complaint by Belgian modem maker Option, the European Commission is to investigate Chinese state subsidies that allegedly are allowing Chinese manufacturers to undercut European modem makers.

Option manufactures USB modems and embedded modems for laptops and made its complaint to the EU last month.

The company claims to have come under threat from China’s Huawei Technologies. It last made a profit in 2007 and has struggled to manage the transition from a high-margin, low-volume business, to the highly commoditised mobile broadband market today which is dominated by USB modems.

European beachhead

Huawei has established itself as the world’s largest supplier of mobile broadband terminals, holding a market share of 53pc, and with a particularly strong foothold in Europe. ZTE is the second-largest vendor with clear margins capturing a market share of 30pc.

The European Commission is to investigate whether Chinese state subsidies are allowing manufacturers like ZTE or Huawei to compete unfairly against European rivals.

The Commission has the option of imposing tariffs on Chinese modem manufacturers in the next 13 months that could be in place for five years.

The Commission is also investigating a similar issue in the paper industry and other claims of trade dumping by Chinese manufacturers.

Yesterday, it imposed punitive charges on certain fibre glass imports from China.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years