Mobile Phone Brands' Focus on Emerging Markets to Create Opportunities for Taiwan's Industry in 2008

(Business News & Technology News, 10 Mar 2008)

Due to roll-outs of new models by Motorola, LG, and Sony Ericsson, Taiwan's shipment volume for handsets is expected to reach 24.5 million units in the first quarter of 2008, down 10.1 percent sequentially. However, according to Taipei-based industry research institute Market Intelligence Center (MIC), Taiwan's shipment volume is expected to reach 106.6 million units for the full year 2008, up 14.9 percent compared with 2007, for the following reasons:
- CDMA shipments for Nokia are expected to begin in the second quarter;
- Motorola will likely expand its procurement plans;
- existing orders from Sony Ericsson and LG.

In addition, it is anticipated that international brands will continue their investments in the development of emerging markets in 2008, creating opportunities for Taiwan makers.

Following the growth in the third quarter of 2007, Taiwan's mobile phone shipment volume reached 27.2 million units in the fourth quarter, up 9 percent sequentially but down 4.5 percent year-on-year. For the entire 2007, Taiwan's shipment volume declined significantly to 92.8 million units, down 23.9 percent as compared to 2006.

As Motorola began to experience operational difficulties, market share losses, operating margin declines and inventory build-up issues, it decided to reduce orders to Taiwanese mobile phone contract makers. Shipment volume of Taiwan makers was therefore significantly affected, according to MIC Industry Analyst Bear Hsiung. For instance, Compal, one of Motorola's major partners, adjusted estimates for shipments twice in 2007 and still failed to reach its annual goal at year-end, with shipment volume reaching only 47.7 million units.

On the other hand, shipment value of the Taiwan mobile phone industry advanced 13.7 percent sequentially to $1.05 billion in the fourth quarter, with ASP picking up from the previous quarter's $37 to $39. ASP increased mainly due to two factors: first, CDMA shipment volume of Calcomp for Indian telecom operator Reliance dropped significantly in the fourth quarter to 2.7 million units, down from the third quarter's 4 million units, with a sequential decline of 33.8 percent. Consequently, value-line products' share of total Taiwanese mobile phone shipment volume declined, preventing ASP from declining further. Secondly, Arima's WCDMA 3G mobile phones for Sony Ericsson feature high ASPs.

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