Smarter Utility

 

[November 24, 2006]

Foreign Handset Part Makers Dominate

(Comtex Business Via Thomson Dialog NewsEdge) BEIJING, Nov 24, 2006 (SinoCast China IT Watch via COMTEX) --Overseas companies from Europe, US, Japan and Taiwan are controlling 95 percent of the upstream mobile phone part market in China's mainland.


This results from various factors, including technological inferiority in domestic companies, said Zhou Yanwu, head analyst with Pday Research, a locally professional consulting firm.

In 2006, China will turn out 300 million to 400 million mobile phones, a big share in over one billion units, the world's total. Handset component manufacturers is bringing more than 70 percent of the production value in the mobile phone industrial chain.

But most of upstream companies are struggling to survive mounting competitions by grabbing slight profits. Only a few Chinese makers like the acoustic component manufacturer AAC Acoustic Technologies Holdings Inc. seem competitive to foreign rivals.

Semiconductor components, including fundamental frequency, memory, application processor, power management unit (PMU), radio frequency and camera module, take more than 50 percent of the total cost for mobile phones.

Now the field in China is dominated by overseas competitors, such as Texas Instruments, Qualcomm, Ericsson, NEC and Infineon Technologies.

"It is demanding for becoming semiconductor component manufacturers. In the radio frequency and analog integrated circuit sector, where European and US makers are dominant, the average gross profit margin is between 30 percent and 40 percent, the highest in the field," disclosed an industrial insider who declined to be identified.

The gross profit margin in making some analog integrated circuits even hit 70 percent, he told journalists.

Taiwanese and Japanese producers are in the spotlight in the field of making mobile phone capacitance, inductance, resistance, housings and printed circuit board (PCB) in China's mainland.

Except for AAC, leading companies in producing functional components like acoustic component, vibrating motor, LCD panel, battery and antenna in the Chinese market are mainly from Japan, South Korea and Taiwan.

"The competition is tough in the industry and directly results into sharp profit falls," complained Li Lixin, president of Macat Optics & Electronics Co., Ltd. in Xuzhou, Jiangsu, eastern China.

Macat, a CNY 260 million revenue earner in the first half of 2004, grabbed net profit of over CNY 26 million in that half from its mobile phone video business. But it did not go on well with its video business in 2004 and 2005 when homegrown cell phone brands' depressing performances squeezed component manufacturers' profit margin further.

In the mobile phone housings making field are only a few big native producers in China, said Yu Yabing, a modeling director in Telsda Company, a local terminal unit manufacturer.

Domestic mobile phone producers are turning to Taiwanese- funded or foreign-Sino housings suppliers in order to seek better quality and brand images. Therefore, a large number of housings plants in Shenzhen and Dongguan in Guangdong have been forced to serve the black-market mobile phone producers over the past two years.

Expect for semiconductor components, the profit margin for making most mobile phone components has declined as low as less than 10 percent averagely.

Anyhow, Hong Kong-listed BYD (SEHK: 1211) is keeping Chinese producers confident with its good performance. For the first half, its battery and mobile phone component earnings amounted to CNY 1.922 billion and CNY 2.104 billion, accounting for respectively 33.8 percent and 37 percent of the company's total CNY 5.683 billion.

Now it is supplying global brands like Nokia, Motorola and Samsung with its mobile phone battery.

(USD 1 = CNY 7.87)

From dycj.ynet.com, Page 1, Thursday, November 23, 2006
info@SinoCast.com

Copyright (C) 2006 SinoCast LLC. All rights reserved

[ Back To Homepage ]