Intel grapples with Chinese Wi-Fi rules

TAIPEI: Intel Corp, the world's largest chip maker, hopes to resolve a trade dispute with China over a popular form of wireless computer networking equipment by June 1, Intel's chief executive said.

In June, China will require wireless networking gear sold in the country to incorporate a Chinese-designed data encryption scheme called wireless authentication and privacy infrastructure, or WAPI.

Only a few Chinese companies have access to the technology, which would require foreign wireless chip makers to share their chip designs with local partners.

"We haven't changed our basic position. We will sell our Centrino mobile technology up until June 1. Hopefully, we'll get the issue resolved before then," Craig Barrett, Intel's chief executive, told reporters in Taipei.

In March, Intel took a hard line against developing Chinese encryption standards for wireless computing, arguing the rules could block hundreds of millions of dollars in sales to China.

"We have been unable to find an appropriate solution that meets Intel's product quality standards that follows the PRC's (People's Republic of China) requirements," Intel spokeswoman Colleen Rubart told Reuters in Hong Kong on March 10.

Barrett's comments come at the start of an Asian tour that includes stops in Malaysia and China and appeared to offer a more optimistic line in the ongoing trade dispute.

"I am a firm believer that international standards allow more rapid movement of technology," said Barrett.

Suppliers of Wi-Fi products - the most popular wireless networking system, have expressed confusion about the Chinese rules and concern about the impact they might have on developing products specifically for the Chinese market.

Wi-Fi, or Wireless Fidelity, has blossomed into a $3 billion industry and is quickly transforming the way businesses and consumers connect to the Internet.

China is still a tiny piece of the market but is expected to grow to $250 million in sales by 2005, according to industry groups.

Wi-Fi has faced little interference in other countries. The technology is based on standards developed by an international industry body and relies on radio frequencies for which the United States and some other countries require no license.

The new rules could allow the Chinese government to decrypt any communication by its citizens over wireless networks. These networks have sprouted in coffee shops, airports, businesses and homes around the world.

Some industry leaders have said the Chinese requirement could be met without difficulty, citing electronics companies that have had to deal with various systems for cellular phone networks and high-speed Internet connections to adhere to national or regional standards.

(C) Reuters