Due to reduced orders from major clients, market losses following the failure of the BenQ-Siemens merger, and lack of large orders from new clients, Taiwanese makers' shipment volume in the Chinese mobile phone industry is expected to grow only 8.5% to 111.6 million units in 2007, with their shipment share dropping to 20%.

Chinese makers such as Huawei, ZTE, and Haier continue to see steady shipment growth, and the number of subscribers in third- and fourth-tier cities in China is increasing. Also, overall demand in the Chinese domestic market continues to grow. Therefore, domestic Chinese mobile phone makers' shipment volume is expected to advance 33.4% to 106 million units in 2007.

In 2006, total shipment volume of the Chinese mobile phone industry, including CDMA (Code Division Multiple Access), GSM (Global System for Mobile Communications), and PAS (Personal Access Phone System) handsets, soared 53.5% annually to 457.6 million units, up from 298.0 million units in 2005. GSM models' shipment share reached 90.2%, with shipment volume increasing from 254.0 to 413.0 million units. CDMA shipment increased 65.5% to 30 million units, accounting for 6.6% of total Chinese mobile phone shipment. PAS shipment dropped 43.7% to 14.6 million, for a 3.2% share.

Global mobile phone shipment volume amounted to 980 million units in 2006, of which 443 million units were contributed by GSM and CDMA mobile phones manufactured by the Chinese mobile phone industry, accounting for 45.2% of total global shipment volume.

In the fourth quarter of 2006, thanks to the peak-season effect, the Chinese mobile phone industry's shipment volume reached 134.6 million units, up 11.4% sequentially and 50.l% year-on-year. Shipment volume of GSM products grew 13.9% sequentially, remaining the main growth driver for the overall industry, while CDMA and PAS products slipped 6.1% and 15.3% sequentially to 9.4 million and 3.0 million units respectively.

Production lines of the five leading vendors, including Nokia, Motorola, Samsung, Sony Ericsson, and LG, as well as other Japanese and Korean vendors, are mainly assigned to GSM models. The majority of these products are shipped to emerging markets, such as India, Russia, the Middle East, and Southeast Asia, in addition to fulfilling Chinese domestic demand.

Benefiting from the significant growth in emerging markets in recent years, shipment volume of major international brands in the Chinese mobile phone industry jumped 59.3% to 271.2 million units in 2006, accounting for 59.3% of the Chinese mobile phone industry's shipment volume. Meanwhile, shipment volume of the five leading international vendors reached 255.9 million units, accounting for 55.9% of the overall industry.

Along with the growing demand for ultra value-line mobile phones in emerging markets in recent years, Taiwanese makers' shipment volume of ultra value-line mobile phones has risen continuously. Therefore, in order to ensure their price competitiveness and maintain profit margin, Taiwanese makers have continuously expanded their production capacities in China.

Taiwanese makers' shipment volume in the Chinese mobile phone industry soared 79.4% to 106.9 million units in 2006, up from 59.6 million units in 2005, with their shipment share in the overall Chinese industry rising from 20% to 23.4%. Meanwhile, Chinese production share of Taiwanese makers, including PAS products, rose to 91.5% in 2006, up from 87.9% in 2005, with the share of production in Taiwan dropping to less than 10%.