BEIJING, April 3 -- Huwei Technologies Co will invest four billion yuan (519 million U.S. dollars) on mobile phone manufacturing and software development at a high-tech park in Guangdong Province, park officials said on Monday.

    Huawei plans to invest two billion yuan during first-phase construction, which is expected to be finished by the end of 2007. It wasn't clear when the second phase, which will carry the same investment, will be completed.

    When the project reaches full capacity, Huawei's Dongguan-based output is expected to reach 70 billion yuan annually, Chen Jianzhi, an official at Dongguan Songshan Lake Science & Tech Park, said in a statement published on the park's Website.

    Huawei's project mainly involves the "mobiles and software", said a tech park official who declined to be identified.

    Shenzhen-based Huawei, China's biggest private telecommunications equipment maker, declined to comment on Monday.

    "It is a natural expansion for Huawei as it has become an OEM (original equipment manufacturer) and co-branding partner in the mobile phone sector," Sandy Shen, a Gartner Inc analyst based in Shanghai, said in an interview on Monday.

    Huawei has signed contracts with global first-tier mobile carriers such as Vodafone to provide them with third-generation phones.

    Huawei's revenue was 65.6 billion yuan last year, with overseas income contributing 65 percent of the total.

    The company's mobile-related revenue grew 100 percent to 1.4 billion dollars in 2006. It sold 27 million handsets worldwide in 2006.

    "Huawei will focus on 3G as the domestic market is a gold mine. On the other hand, 2G's heated competition has eroded the industry's profit," Shen said.

    China is expected to issue next-generation mobile network licenses later this year. The new technology will provide high-speed data services to phone users, allowing them to enjoy video conferences, multi-player games, film downloads and other services.

    China's 3G user base is expected to reach 100 million in 2008, 17 percent of the total handset user base, according to Norson Telecom Consulting, a Beijing-based research firm.

    ZTE Corp, Huawei's domestic arch rival, has invested heavily to establish a research center for mobile communications in Shanghai with 5,000 engineers.

    Huawei's handset manufacturing and research facility is located in Shenzhen.

    (Source: Shanghai Daily)