Cellphone makers to gain from deal

Taiwanese mobile-phone manufacturers BenQ Corp (明基電通), Compal Communications Inc (華寶通訊) and Quanta Inc (廣達) may get a boost in orders from a proposed business alliance between Motorola Inc and Siemens AG, pundits said yesterday.

"With Motorola at the helm of the alliance's cellphone business, Taiwanese handset makers who already have a strong manufacturing relationship with Motorola will definitely benefit," said Alex Wu (吳興國), an analyst at China Securities Corp (中信證券).

Motorola, the world's second-largest mobile phone company is close to cutting a deal with the world's No.4 cellphone company to swap its wireless network business for Siemens' handset unit, Crain's Chicago Business said in a online report.

The alliance aims to cut costs and expand market share for the two firms.

Crain's said the venture would boost Motorola's share of the global handset market from its current 17 percent to 25 percent and bringing it nearer to market leader Nokia Oyj, who now holds 37 percent of the global market. In return, German-based Siemens would gain access to Motorola's code division multiple access (CDMA) wireless telecom equipment, a technology that Siemens needs in order to expand into China and the US, Crain's said.

Motorola relies heavily on Taiwan for original-design manufacturing of handsets. About 30 percent of Motorola's cellphones are produced by BenQ and Compal, Wu said.

According to a report released by SinoPac Securities (建華證券) last week, BenQ and Compal together are set to ship out 15 million handsets for Motorola this year, and that figure may pass 16.5 million next year.

In the second quarter, Siemens asked, Quanta, its local handset maker, to delay production of an order for 900,000 handsets.

"The unexpected change ... might be relate to Siemens' pending deal with Motorola," Wu said.

But if the deal does go through, Taiwanese makers will reap the windfall.

"Motorola's existing partners, BenQ and Compal, will get an infusion of orders first, and Quanta will also benefit from its existing ties with Siemens."

Motorola may also seek more manufacturing partners in Taiwan to spread risks.

"They won't put all their eggs in one basket ... other local companies such as Inventec Co (英業達) may be included," Wu said.

GVC Corp (致福) and Arima Communication Corp (華冠), who already produce handsets for Sony-Ericsson on a contract basis, however, are less likely to gain orders from Motorola.

"These two international players are rivals. To protect their know-how, they won't release orders to the same manufacturers," Wu said.

Taiwan is set to ship out 27 million handsets this year, accounting for about 6 percent of the global cellphone market. That number may rise to 35 million units, or a 8 percent global market, next year, Wu said.