The company said it set up a wholly owned subsidiary, NEC Mobile Communications Development Singapore Pte Ltd, in late July capitalised at 200 million yen ($1.51 million).

NEC said the new unit will be responsible for designing and developing hardware and software for next-generation cell phone systems based on wideband code division multiple-access (W-CDMA) technology.

The official said it was easier to find engineers in mobile communications technology in Singapore than in Japan. The new unit, which will start operations later this month, will employ about 20 staff in the first year and increase the work force to more than 100 by 2000.

NEC said itwould target worldwide sales in 2005 of 500billion yen in the W-CDMA business, of which 100 billion yen would be generated from the Asian market, excluding Japan.

"China will be a big market, as it is eager to introduce cutting-edge technology for mobile communications," Yukihiko Baba, an NEC managing director, told the news conference. In March, NEC set up a joint venture in Britain with ERATechnology Ltd for developing a W-CDMA-based cell phone system.

W-CDMA technology makes possible mobile multimedia applications such as desktop computing through mobile phone networks, high-speed wireless Internet services and video transmission.

While NTT DoCoMo, the cell phone unit of telecoms giant Nippon Telegraph and Telephone Corp, and European cell phone makers support W-CDMA technology, NTT's rival DDI Corp and U.S. Telephone operators support different technology called cdmaOne that is currently incompatible with W-CDMA.