In spite of the traditional slack season in the global mobile phone market, the Taiwanese mobile phone industry as a whole posted a total shipment volume of 29 million units, year-on-year growth of 13% in the first half of 2005.  The main factors behind this growth were the increase in orders for value-line handsets from Motorolahich is collaborating with the GSM Association on the development of emerging markets ?and Sony Ericsson's efforts to strengthen the value-line and mid-range segments of its product line. 

According to the Market Intelligence Center (MIC), an increase in shipments to Motorola and Sony Ericsson boosted the shipment volume of the Taiwanese mobile phone industry to 16.2 million units in the second quarter of 2005, representing a year-on-year growth rate of 28%, and 27% sequentially. First-tier Taiwanese ODMs have been accommodating Motorola in production of the value-line C115 and C114 series, which are targeted at emerging markets such as Central and Eastern Europe, Africa, and Southeast Asia. Also, Sony Ericsson's new K300i handset went into mass production. Contracts awarded by Motorola and Sony Ericsson were thus the main forces behind the Taiwanese mobile phone industry's growth in shipment volume, with these two major brands accounting for around 71% of the Taiwanese mobile phone industry's total shipment volume in the second quarter.

However, the performance of second-tier Taiwanese ODMs was less impressive. Lite-On announced an indefinite suspension of its mobile phone operations; other makers such as Quanta, Compal, Chi Mei and DARTS have been affected by a failure to secure contracts for new models while existing models are reaching the end of their production runs. Second-tier shipments have also been hit by the increase in fake-branded and grey market handsets in China, which lowered demand for private label orders. As a result, second tier makers saw their combined shipment volume fall sequentially in the second quarter.

The performance of Taiwanese branded makers, such as BenQ, DBTel, Asus and Inventec was mixed, with BenQ and DBTel disappointing and Asus and Inventec showing only slight growth. HTC also had only marginal growth. The combined shipment volume of these five makers decreased sequentially.

As regards shipment value performance, although Taiwanese makers were manufacturing large volumes of mid-range GPRS (General Packet Radio Service) handsets in the first quarter, the growth in this area was lower than the growth in production of value-line, monochrome display GSM (Global System for Mobile) handset models for Motorola. In the second quarter, GSM handset share actually increased, to around 38%. GPRS share grew only slightly, to 58%, while the shares held by Smartphones, CDMA (Code Division Multiple Access) handsets and WCDMA handsets all fell. As a result, ASP (Average Selling Price) fell dramatically in the second quarter, dropping to US$54, and the industry's total shipment value grew by only 3.6% year-on-year, to US$870 million. Total shipment value for the first half of 2005 was US$1.7 billion. This figure represents a year-on-year decrease of 7.8%, mainly due to the dramatic increase in orders for value-line handsets.

MIC estimates that by the third quarter of 2005, the volume of orders for the models Taiwanese maker are predominantly shipping at present will start falling, but Motorola, Panasonic, and NEC are not expected to begin awarding contracts for new models until towards the end of the third quarter. The industry's total shipment volume will therefore remain at around the same level as in the second quarter. By the fourth quarter, MIC further estimates that the effects of BenQ's acquisition of Siemens' mobile phone division will start to show and mass production for new Motorola handsets will commence, meaning that the Taiwanese mobile phone industry's shipment performance will pick up again, with quarterly shipment volume breaking through the 20 million mark. It can therefore be anticipated that, for the whole of 2005, the Taiwanese mobile phone industry will achieve annual shipment volume of 67.8 million handsets, representing an annual increase of 29.5% compared to 2004.