Thu, Nov 13, 2003 - Page 10 News List

Handset orders may grow 50%

BUILDING MOMENTUM A recent buying spree is spurring the industry, as people start to replace their weathered, beaten and outdated cellphones with newer models

By Lisa Wang  /  STAFF REPORTER

Taiwanese mobile-phone makers are expected to ship nearly 50 percent more handsets this year from a year earlier and carry that momentum into next year, a research house said yesterday.

Driven by a buying spree caused by handset replacement, the world's cellphone industry is expecting to see mild growth in production this year, with local manufacturers grabbing about 9.4 percent of the market share worldwide, said Fend Lin (林育烽), a mobile communications analyst at the research house Market Intelligence Center.

Shipments from local handset makers may total 42.7 million units with shipment value at US$3.14 billion this year, up 49 percent from the previous year, Lin said.

He attributed this shipment growth to the fact that Taiwanese handset makers have overcome certain technology barriers in making mobile phones with color screens or embedded cameras, or handset models that are based on GPRS, or general packet radio service, which allows for faster Internet connection.

Taiwanese mobile-phone makers are expected to attain a better global market position next year, with a market share of around 11 percent. The shipment by local makers is estimated to grow 30 percent to 55.5 million units, while overall shipments may jump to 488.8 million units around the world next year, according to MIC's research.

Though global handset shipments will continue to expand in the following years before reaching 578.4 million in 2008, "Taiwanese makers will see scant room for further expansion in the global market in the short term as Nokia and Samsung will continue to dominate the industry," Lin said.

Nokia Oyj of Finland and Samsung Electronics Co from South Korea currently enjoy a combined 50-percent share in the handset market worldwide.

Both Nokia and Samsung have bucked the trend of outsourcing more production to original design manufacturing (ODM) companies to improve their bottom line, and rather keep the bulk of their name-brand cellphone manufacturing in their own factories.

As Korean rivals focus on developing next-generation CDMA, or code division multiple access phones, Taiwanese companies are expected to receive more GSM/GPRS handset orders from international vendors, the MIC analyst predicted.

"It's certain that the trend of farming out more production to OEM companies will become clearer, but Nokia and Samsung's stance will be key to the pace of the growth of that trend," he added.

Motorola, Sony Ericsson and Panasonic are three major clients of local companies.

The MIC analyst, however, pointed out that local companies gradually reduced their shipments to China as they came under heavy pressure from inventory buildup during the height of the SARS outbreak last summer and the improving technology available in Chinese-made mobile phones.

To enhance competitiveness and to boost their product's added value, Lin suggested that branded vendors should pay more attention to marketing capabilities and to cater to their end customers' needs.

Local ODM service providers also should focus on industry design including developing mobile phones with more functions such as multimedia, or the so-called smart phones with PDA functions, he said.

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