Taiwan's contract handset makers are expected to see growth squeezed further next year as global mobile-phone vendors are increasing in-house production amid the fast-changing handset market, industry watchers said yesterday.
The shift in major vendors' outsourcing strategies is putting more pressure on local mobile phone manufacturers who already face stiff competition as more Chinese handset design companies and contract manufacturers join the game.
"Taiwan's handset manufacturers are finding it more and more difficult to solicit orders, not to mention maintain profits," said Steven Tseng (曾續良), an analyst with Yuanta Core Pacific Securities (元大京華證券).
Local companies are experiencing a free-fall in gross margin, Tseng said. Now they can only secure gross margin of 15 percent, from 25 percent previously, he said.
Compal Electronics Inc (
"In light of shrinking gross margin, BenQ Corp (
Similar worries can be found in the latest report from researcher the Market Intelligence Center (MIC,
"Taiwanese companies only play a minor role in filling the capacity shortfall for global handset vendors," MIC analyst Feng Lin (
In the report, MIC said local handset makers are expected to ship around 63.6 million units next year, representing a scant 21.6-percent expansion from this year, compared to the explosive growth levels of the past.
The researcher blamed intense competition and global handset vendors' move to increas in-house production to better cater to customer needs for the slower growth.
Global handset demand is expected to grow at an annual pace of 6.8 percent next year with around 660 million units shipped, versus 640 million units this year.
Simon Hsu (徐玉學), an analyst with the private Topology Research Institute (拓墣研究所), also expects local mobile phone makers to face obstacles going forward, but had some optimism.
"We believe companies capable of making tailored handsets for telecom operators will still have respectable growth, riding on the growth in commercial operations of 3G services," said Hsu.
Chi Mei Communication Systems Inc (
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