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Matsushita pulls out of low-end phones

Matsushita Electric Industrial, which sells electronics under the Panasonic brand name, yesterday said it is dropping out of the low-end handset market to maintain profits, representing the end of its partnership with local handset manufacturers.

Matsushita's move came as bigger rivals Nokia Oyj and Motorola Inc continue their battle selling low-priced cellular phones in a race to become the world's top handset brand.

"Our new strategy involves shifting to the high-end market in order to make a profit. Right now, you can hardly see any low-end Panasonic phones on the market," said Chen Shih-chang (陳世昌), the new chairman of Matsushita's local unit, Panasonic Consumer Sales (Taiwan) Co (松下資訊).

"We cannot compete with our rivals at the low-end of the market," Chen said.

He said it would be a real challenge for his company to hit its target of NT$4 billion (US$119 million) in revenue this year.

Chen made his debut with the local media yesterday five months after assuming the position in July.

High-end mobile phones, or those priced higher than NT$10,000 per unit, account for about 15 percent of the total annual sales of 5 million units in Taiwan, according to Chen.

Chen said his company stopped selling medium and low end models during the first quarter of this year after completing contracts with both Quanta Computer Inc (廣達電腦) and Compal Communications Inc (華寶通訊).

"As Matsushita only farmed out production of its medium and low end mobile phones, there will be no more orders from the Japanese handset vendor," said Yeng Ming-shan (顏明賢), an analyst with Fubon Securities Investment Services Co (富邦投顧).

The impact on the two companies would not be that great as orders from Matsushita only made up a small portion of their sales, or handset shipments, Yeng said.

Compal supplies 90 percent of its 35 million handsets for 2005 to Motorola with less than 10 percent going to Matsushita, he said.

And Matsushita orders only made up a mere 5 percent of Quanta Computers' total sales, he added.

"But, without new orders coming in, Quanta is likely to follow Compal Electronics Inc (仁寶電腦), parent company of Compal Communications, in shutting down its handset manufacturing production lines," Yen said.

Yen expected Quanta's handset sales to plunge to around 3 million units this year from 5 million last year after ending its contract with its biggest client, Matsushita.

Quanta will also lose orders from Siemens AG after the German company sold its mobile device unit to local handset brand BenQ Corp (明基), he said.

In other news, Chen, who is also the chairman of home appliances unit Panasonic Taiwan Co (台松電器販賣), said Matsushita is aiming to grab top position in Taiwan's plasma display panel (PDP) TV market next year, targeting LG Electronics Inc.

Matsushita, which has the lead in Taiwan's liquid-crystal-display (LCD) TV market, is scheduled to launch the first batch of 42-inch PDP TVs made in cost-saving Taiwanese plants next month, Chen said.

The move will see the price for a 42-inch PDP TV drop dramatically to NT$89,900, compared to more than NT$140,000 for a similar model imported from Japan, he said.
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