Chinese mobile phone industry shipment volume grew 92.2% year on year in the third quarter of 2003 to reach 52.8 million units. However, volume sequentially increased at a relatively low 13.1% due to carryover of massive inventories and withered demand due to SARS (Server Acute Respiratory Syndrome) from the second quarter. Demand continued to be stymied in both July and August, and did not pick up until September during the run-up to the National Day holiday.

 Three major changes occurred in the Chinese players top-ten shipment volume ranking in the third quarter. Smooth ramp-up of new models combined with the merger of Beijing Ericsson and Beijing Suohong brought Sony Ericsson back into the top ten rankings. Additionally, Bird regained its position as the leading Chinese maker, while Amoisonic once again was forced out of the top ten.  

China's three main production areas, northern, eastern, and southern China, respectively accounted for 36.9%, 34.6%, 27.3% of Chinese mobile phone industry production in the third quarter of 2003. Share of mobile phones produced in southern China declined from the second quarter due to slower growth in shipments from Chinese makers.  

Widespread small-scale, wide variety production strategies have lead to a market flooded with new models differentiated only by small variations in industrial design, which has led to an intense price war. In response, Chinese makers have begun working to boost in-house design capabilities and are procuring total solutions in large volumes from mobile phone design house and international vendors to rapidly roll out new phones. Furthermore, Chinese makers are ratcheting up procurement volume of components to squeeze down costs.  

Following one to two years of strategies focused on marketing, the Chinese players are gradually turning toward expanding production cost and design capabilities. The Chinese mobile phone industry is thus quietly transitioning from a wild free-for-all toward a competitive environment that will shake out the unfit players.