IBM to sell chips to Chinese Internet builder

IBM agreed with Huawei Technologies Co. to supply a variety of sophisticated processors and chips for Huawei's routers and switches, the key building blocks for networked computers that form the Internet. Terms weren't disclosed.

The multiyear agreement could enhance IBM's chances of selling a broader range of computer products, including server computers, in China as the nation uses the Internet increasingly.

"We view Huawei as a very significant customer, and this establishes a stronghold for our technology in the Asia-Pacific region," said Steve Longoria, IBM's director of marketing for network processing.

In 2002, the business from Shenzhen-based Huawei will add roughly 10 percent to Armonk, New York-based IBM's total revenue from the sale of network processing equipment, he said.

Among the components IBM will supply to Huawei are network processors, chips that rout packets of data, and other customized chips linked to network software.

Huawei, founded in 1988, is China's primary maker of routers and optical data-transmission systems used by telecommunications companies. The company said it had $1.3 billion in first-half 2000 revenue and contracts in Russia, eastern Europe, Africa and Asia. It has cooperative arrangements with such U.S.-based telecommunications-equipment makers as Texas Instruments Inc., Lucent Technologies Inc. and Motorola Inc.

IBM announced a joint venture last month with China Great Wall Shenzhen Co. to make advanced printed circuit-board assemblies for Finland's Nokia Oyj at a factory near Beijing.