Researcher expects modest growth for 2007 handset sales

Taiwanese mobile phone makers are expected to post modest sales growth next year, benefiting from the soaring demand for low-priced handsets in emerging markets, a Taipei-based market research company said yesterday.

Robust demand in developing nations like India and China should help local handset makers almost double their shipments to 160 million units this year, Topology Research Institute (拓墣產業研究所) projected.

That would mean about one out of five mobile phones worldwide would be made by Tai-wanese companies, according to the researcher.

"With demand in the emerging markets remaining strong next year, we expect Taiwanese companies to experience moderate growth on the back of the rising trend in outsourcing," said Fox Su (蘇昱霖), who tracks the communications industry for Topology.

Su did not give details about the forecast growth rate, but he said the pace would be milder given a high base this year.

Su predicted that global handset shipments would rise from 784 million last year to 911 million units this year mostly owing to surging demand from emerging markets, and to 1.02 billion units next year, he said.

Entry-level handsets, which are mainly sold to underdeveloped or developing countries, would account for about half of the overall shipments, according to Su's forecast.

Compal Communications Inc (華寶通訊), which manufactures mobile phones for global brands, mainly Motorola Inc, is a good example, Su said.

Benefiting from Motorola's expansion in emerging markets, Compal Communications is expected to ship 65 million units this year, compared with 36 million units last year, Su said.

Motorola expanded its global market share to 21.8 percent last quarter from 17.5 percent a year ago, according to market researcher International Data Corp.

Motorola's expansion in the emerging markets poses a growing threat to LG Electronics, the world's fifth-largest cellphone vendor, Su said.

This may force the South Korean company to give up its strategy of making all phones at its own factories and start farming out production to local companies, Su added.

Su said LG Electronics had approached local companies such as Arima Communications Corp (華冠) and ASmobile Communication Inc (兆碩), a handset manufacturing arm of Asustek Computer Inc (華碩).

"We believe local firms have a good chance of winning orders [from LG Electronics] as early as the third quarter," Su said.