Handset Shipments from Taiwan to Reach 281 Million in 2008

• Posted: Thursday, October 26, 2006
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• Author: pradhana
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• Filed under: Handset

SINGAPORE - October 26, 2006 - The role of Taiwanese handset makers is becoming increasingly significant in the global handset industry. Cooperation with handset original design manufacturers (ODMs) has become an integral part of the handset strategies of some big original equipment manufacturers (OEMs) such as Motorola and Sony Ericsson, especially in the low-end handset segment.

"Taiwan's ODMs gain cost advantages through setting up plants in mainland China, and their leading role in supplying handset components is helping them further improve their cost structure and complete their supply chain," says ABI Research industry analyst Junmei He.

"Handset shipments from Taiwan will reach 281 million in 2008, 79% of which will be ODM handsets, and these shipments will account for 26% of total handset shipments globally." Currently, Motorola and Sony Ericsson are most active in cooperating with Taiwanese ODMs; Nokia and Samsung are still slow to move in this direction. ODM strategies are also popular in Japan, but shipments are still relatively low.

There is also much less cooperation between Chinese mainland handset vendors and Taiwanese ODMs, primarily because of unstable demand and the low profit margins produced by intensive competition in the mainland Chinese market.In the mainland market, Chinese vendors lost market share last year, but their profit margin today is improved compared to 4Q 2005.

"The handset market structure in mainland China has changed during the past two years," says Junmei He. "The changes include the erosion of market share by illegally distributed handsets, the reforming of distribution channels by vendors on the mainland, and the further involvement of operators in the sales and supply chains.

"As a result of these changes, the big vendors will garner greater market share, and the proportion of operator-customized handsets will increase quickly, reaching 77% of total handset shipments on the mainland in 2011.

Source: ABI Research

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