Japanese Vendors Shut the Door on GSM
December 16, 2005
Confirming the trend of the Japanese players' hasty retreat from value-line GSM models, both Panasonic and NEC have recently announced the closure or restructuring of their overseas sites to orient their businesses toward 3G models. This week NEC revealed that they will cut China capacity by half and cease developing value-line handsets; the company also plans to shut down 25% of its retail sites, scaling the number down to 2,000. NEC's announcement follows a similar move by Panasonic, who will be closing lines in the Philippines and Czech, as well as restructuring its research centers in the US and UK.
Along with vendors Kyocera and Toshiba, NEC and Panasonic's recent decisions underscore the rising speed with which Japanese handset makers are withdrawing from the GSM segment and pinning their hopes on 3G. Latecomers to GSM due to initial emphasis on the PDC (Personal Digital Communications) technology used in their home market, Japanese brands have encountered withering market share and substantial financial loses as Western and Korean brands compete aggressively on price in the value-line and mid-range GSM/GPRS segment. Although in the long term it remains to be seen whether this move will stem the losses and keep these Japanese players in the handset market, the decisions will certainly have a negative impact on Taiwanese ODM shipment volume. However, considering the gradual withering of volume outsourced to Taiwanese industry, the impact will likely be slight.