Wed, Jan 25, 2006 - Page 10 News List

HTC signs deal with DoCoMo

3G AGREEMENT Taiwan's largest maker of 3G handsets announced that it will begin supplying the Japanese giant with the advanced phones in the second half of this year

By Lisa Wang  /  STAFF REPORTER

High Tech Computer Corp (HTC, 宏達電), Taiwan's biggest smartphone maker, said yesterday it would begin making third-generation (3G) phones for Japanese mobile operator NTT DoCoMo Inc this year, representing a breakthrough for the company's efforts to enter the world's biggest 3G market.

"The deal means a lot for HTC, as NTT DoCoMo is our first Japanese mobile phone customer," said a High Tech Computer official who wished to remain anonymous.

HTC, which also makes 3G handsets for European operators such as Vodafone, plans to provide Japan's second-largest 3G carrier with the first batch of phones during the second half of this year, she told the Taipei Times yesterday.

Rumors have circulated that HTC will sell the new phone under its own brand name to boost awareness and increase profit margins, but the official downplayed such speculation yesterday.

"We haven't decided whether we will sell the smartphone under our own brand, or co-brand with DoCoMo," she said, without elaborating further.

Third-generation phones allow faster downloads of data, music and other media, and High Tech Computer is the world's biggest maker of mobile phones that use Microsoft Corp's Windows operating system.

"The agreement with NTT DoCoMo is a landmark for High Tech Computer, making it the first Taiwanese handset maker to enter the Japanese market," said Lu Chia-lin (呂家霖), an analyst at Yuanta Core Pacific Securities (元大京華證券).

Besides, Japan has the world's biggest 3G population, with around 41 million users, Lu said. He forecast the NTT DoCoMo deal would add 7 percent to High Tech Computer's revenue this year.

Lu predicted 3G mobile phones would make up around 13 percent of High Tech Computer's total output, up from a low single-digit figure last year.

Sales of smartphones will jump 64 percent to 82 million units this year, compared with the 50 million units estimated for last year, he forecast.

Lu gave High Tech Computer a "buy" rating with a six-month target price of NT$808 (US$25.26) on the back of its leading position in making higher-margin 3G phones.

The target price represented about 20 percent from yesterday's closing price of NT$674 on the Taiwan Stock Exchange. The stock set a historic high of NT$716 on Jan. 17.

"High Tech Computer has proved to investors that it is capable of sustaining profits as the mobile phone industry enters the 3G era," Lu said, adding that it was a major hinderance for many handset makers to make 3G phones.

Local companies Quanta Computer Inc (廣達電腦) and Asustek Computer Inc (華碩電腦) also started making smartphones for European mobile operators last year, but it would take time for them to grow big enough to compete with High Tech Computer, Lu said.

Lu projected High Tech Computer's revenue will skyrocket by 60 percent this year to NT$118.5 billion, from NT$72.78 billion last year, helped by increasing demand from its customers.

During the same period of time, net income would almost quadruple to around NT$18 billion, from NT$4.7 billion last year, Lu forecast.

Earnings per share would also rocket to NT$50 from the NT$13.5 estimated for last year, according to Lu.

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