GVC gets second Ericssonorder for mobile phones

GVC Corp (致福) won a new contract to design and manufacture mobile phones for Ericsson yesterday, the second contract GVC has won this year.

The new contract brings GVC's total handset production for this year up to seven million units, with only two million to 2.5 million units slated to be made for clients other than Ericsson.

"The contract has already been signed," said Huang Lee (李皇) communications director at GVC Corp. "We'll be making five million handsets for Ericsson this year."

In addition, the firm forecasts a 25 percent rise in mobile phone production next year to 10 million handsets and revenues of NT$30 billion.

GVC also believes it will make NT$10 billion on one of its other key products, ADSL modems and other Internet equipment.

Early reports in the local press caused GVC's stock price to skyrocket yesterday. It rose the 7 percent limit allowed by Taiwan law to end the day at NT$23.7 per share.

The company has seen its stock rise over 150 percent so far this year, from NT$9.45 per share when the stock market opened in January.

Officials from Ericsson were less forthcoming on the new handset deal, saying that until the company "announces more details around the `efficiency program' on 20 April ... we cannot say any more about the effects of the program," according to Mads Madsen, director of corporate public relations at Ericsson.

The company's efficiency program is designed to show how Ericsson plans to reorganize its mobile phone division, which lost US$1.7 billion last year.

In recent months the company said it would close one manufacturing plant in Sweden and another in England, putting nearly 3,300 people out of work in those countries.

Although no new outsourcing plans were announced at the time, analysts believed production from the plant closures would be shifted to Asia, since Ericsson made a similar move in January.

At that time, the firm outsourced mobile phone manufacturing to Flextronics of Singapore and awarded a contract to design and manufacture handsets to GVC in Taiwan.

Taiwan-based Arima Computer Corp (華宇電腦) also agreed in August 2000, to produce an undisclosed number of handsets for Ericsson this year.

Shares of Arima rose 3.8 percent yesterday to NT$40.6.

Arima and GVC make phones on an original design manufacturer basis for Ericsson, the world's third-largest handset seller.

Although Singapore-based Flextronics also manufacturers handsets for Ericsson, it is not involved in the design process.

Manufacturers in Taiwan have been putting more effort into research and development in recent years in an effort to stave off growing competition from a number of other regional economies.