According to research of the Taipei-based Market Intelligence & Consulting Institute (MIC) conducted as part of the ITIS project, in the third quarter of 2009 Taiwanese feature phone manufacturers faced the end-of-life of some products manufactured for major customers Motorola, Sony Ericsson, and Nokia, while there were merely a couple of new models which began shipments in this quarter. As a result, Taiwanese feature phone industry shipment volume saw substantial declines in the third quarter, dropping 21.8% sequentially and 55.9% year-on-year.
According to MIC Industry Analyst Joyce Chen, "with branded customers adjusting their product lines and changing manufacturing partners, it is expected that Taiwanese feature phone manufacturers will see further declines ahead." For instance, Motorola has shifted its focus to Android-platform products and has adopted MediaTek's chipset solutions for its value-line products. Chinese manufacturers, which have been more familiar with the MediaTek platform than their Taiwanese counterparts, are therefore more likely to land Motorola's manufacturing orders. At the same time, as Nokia has not been quite successful in the North American CDMA market, the scale of CDMA model production outsourced to Taiwan has been on the decline, too. Sony Ericsson used to place manufacturing orders for value-line products with Taiwanese manufacturers. As the company's value-line products have not been well-received in the market, the scale of production has been diminishing, too.
Taiwanese feature phone industry shipment volume arrived at 9.1 million units in the third quarter of 2009, representing a sequential decline -21.8%. Shipment value, meanwhile, dropped 11.6% sequentially to US$433.0 million. As new shipments in the third quarter consisted mostly of mid-range GPRS and EDGE models for Motorola and WCDMA models by Qisda and IAC, the industry's ASP (Average Selling Price) rose from US$42.0 in the second quarter to US$47.0 in the third quarter.
All told, the declines of Taiwanese feature phone shipment volume in 2009 can be attributed to several factors", said Ms. Chen: "as major branded vendors began procuring value-line chipsets from different suppliers, Chinese manufacturers have therefore taken over orders. At the same time, the rise of Chinese black-market manufacturers has squeezed shipment volume of value-line products by branded vendors, which has affected Taiwanese manufacturers' contract manufacturing business. Moreover, with the continuing growth of Smartphone shipment volume worldwide, the feature phone market has been encroached upon by the Smartphone products. Consequently, it is projected that Taiwanese feature phone manufacturers will have to adjust their product lines and business strategies to cope with the changes in the industry."
The major branded mobile phone vendors used to adopt mostly chipsets supplied by TI, Freescale, and Infineon in their value-line products. However, TI has exited from the value-line chipset market, and Infineon is considering ending the value-line chipset business, too. While most major chipset suppliers have migrated to the 3G market, MediaTek launched the 2.5G solution 6253, which incorporates digital baseband, analog baseband, power management, and RF transceiver, in the second half of 2009. MediaTek's value-line chipsets have already been adopted by major branded vendors including LG, Motorola, and Samsung in 2009.
Taiwanese feature phone manufacturers' main shipments used to consist of value-line 2G and 2.5G products. Due to the changes in the global chipset suppliers' value-line product lines, MediaTek's value-line products have been widely adopted by major branded vendors. However, as most Taiwanese manufacturers have been unfamiliar with the MediaTek platform - the only exception being Arima - it is projected that they will have difficulties in landing orders for value-line products in the future.
More information can be found in the following MIC report: The Taiwanese Feature Phone Industry, 4Q 2009
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About MIC
Market Intelligence & Consulting Institute (MIC), based in Taipei, Taiwan, was founded in 1987. MIC is Taiwan's premier IT industry research and consulting firm providing intelligence, in-depth analysis, and strategic consulting services on global IT product and technology trends, focusing on markets and industries in Asia-Pacific. MIC is part of the Institute for Information Industry. https://mic.iii.org.tw/english
About ITIS
The Industry and Technology Intelligence Services (ITIS) project is managed by the Department of Industrial Technology of Taiwan's Ministry of Economic Affairs. As part of the project, research is conducted in a variety of fields, including the ICT sector. The project serves both the public and private sector.