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Gigabyte enters cellphone market

In the latest case of domestic electronics companies making a shift into own-brand business, Gigabyte Communications Co Ltd (集嘉通訊), a mobile phone affiliate of computer motherboard maker Gigabyte Technology Co (技嘉), yesterday announced that it has entered the nation's crowded handset market.

Gigabyte Technology's move came two years after its bigger rival Asustek Computer Inc (華碩電腦) unveiled its first mobile phone under the Asus brand.

Gigabyte Communications, established last June, said it plans to launch its first mobile phone under the Gigabyte brand in the July-September period. The handset will be targeted at the high-end segment, which accounts for about one-fifth of the nation's NT$42 billion (US$1.35) market.

The company is also seeking opportunities to make phones for international brands outside the Asian market, Jesse Lee (李忠義), a vice president of Gigabyte Communications, said in a phone interview.

"In the initial phase, we are targeting high-end models, because of the high margin and lower competition," Lee said.

He said his company will not throw a large number of models into the market as some vendors are doing in order to grab a larger market share, but plans to introduce at least four models locally.

Gigabyte Communications will not roll out handsets cable of offering third-generation (3G) services in the short term, he said.

Local wireless service providers, led by state-owned Chunghwa Telecom Co (中華電信), are set to start providing the speedy 3G services next quarter.

Gigabyte Communications plans to expand its staff to around 200 from 80. Half of the company's employees work in the research and development department.

"It is not a bad idea to tap into the high-end segment, but it will still be a real challenge for a new entrant like Gigabyte Communications to muscle into the market, which is approaching saturation," said Marty Kung (龔俊光), an analyst with market researcher Market Intelligence Center (市場情報中心) in Taipei.

As the rate of growth in the market is weakening, it would be easier for Gigabyte Communications to take on local vendors for a share of Taiwan's mobile phone market, Kung said.

Three major local vendors, BenQ Corp (明基電通), Inventec Appliances Corp (英華達), which operates the OKWAP brand, and Dbtel Inc (大霸電子), account for a bulky 20 percent of the more than one-fifth market share belonging to local companies, Kung said.

He predicted that handset sales will only inch up around 3 percent this year to 6.7 million units, from 6.5 million last year.

But the prospect for local companies is even gloomier after Taiwan's cellphone carriers start offering 3G services in the second half of the year, as most local players have lagged behind their global competitors in developing handsets capable of offering the new services, he said.

"Without a near-term plan to launch 3G handsets, the company could face a rough start in building a position in Taiwan's mobile phone market," Kung said.
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