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Research Reports

The Taiwanese Mobile Phone Industry, 1Q 2004 and Beyond

June 30, 2004 / Feng Lin

49 Page, Statistics Report

US$2,700 (Single User License)

Abstract

After demand peaked in the fourth quarter, global mobile shipment volume reached 150 million units while shipment value totaled approximately US$1 billion in the first quarter of 2004. For the first time, Taiwanese shipment fell behind global shipment growth due to limited contracts and customers' increased in-house production. Value was boosted due to Taiwanese branded efforts in southeast Asian markets. In the second quarter, Taiwanese shipment volume is expected to see gains due to an increase in branded shipments and shortened generational transitions between models. Yet dwindling demand for knocked-down kits from China and competition for business from major vendors will present challenges.

List of Topics

Quarterly forecast of Taiwanese shipment volume up to 4Q 2004. Special discussions on WCDMA, and the growing dominance of East Asian makers and their branded business. 1Q 2004 review of volume, volume by assembly level, value, ASP, and product architecture including product mix, product mix by tier, displays, camera modules and handset shapes. Taiwanese mobile phone market share of baseband, power amplifier, and transceiver suppliers. Manufacturer rankings and profiles, customer portfolios, industry concentration analysis, production locations, shipment destinations, and business types.

ADI , Agere, Alcatel, Amena, Ares, Arima, ASmobile, AT&T Wireless, Bahow, Bell Mobility, BenQ, Bouygu, Broadcom, Capitel, CECT, Chartkar, Cingular, CMCS, Commit, Compal-C, Compal-E, CuteMobile, DARTS, Dbtel, DoCoMo, Eastcom, EMP, Fin Win, Foxconn, GVC, Haier, HTC, IAC, Infineon, Inventec, Inventec Alliance, Konka, LGLite-On, ,Mediatek, Microsoft, Mio Technology, Mitac, MmO2, Motorola, NEC, Ningbo Bird, Nokia, O2, One, Orange, Panasonic, Panda, Pannon, Pantech, Philips, Qian Wei, Qualcomm, Quanta, Renesas, RFMD ,Sagem, Samsung, Sewon, Shenzhen SED, Siemens, Silicon Labs, SK Telecom, Skyworks, Solomon Wireless, Sony Ericsson, Soutec, Sprint, Start Communication, sunrise, Tango, Telenor Mobil, Telus, Teson, TI, TIM, T-Mobile, UTStarcom, Vacom, Verizon Wireless, VK, Vodafone, Wind.

ADI , Agere, Alcatel, Amena, Ares, Arima, ASmobile, AT&T Wireless, Bahow, Bell Mobility, BenQ, Bouygu, Broadcom, Capitel, CECT, Chartkar, Cingular, CMCS, Commit, Compal-C, Compal-E, CuteMobile, DARTS, Dbtel, DoCoMo, Eastcom, EMP, Fin Win, Foxconn, GVC, Haier, HTC, IAC, Infineon, Inventec, Inventec Alliance, Konka, LGLite-On, ,Mediatek, Microsoft, Mio Technology, Mitac, MmO2, Motorola, NEC, Ningbo Bird, Nokia, O2, One, Orange, Panasonic, Panda, Pannon, Pantech, Philips, Qian Wei, Qualcomm, Quanta, Renesas, RFMD ,Sagem, Samsung, Sewon, Shenzhen SED, Siemens, Silicon Labs, SK Telecom, Skyworks, Solomon Wireless, Sony Ericsson, Soutec, Sprint, Start Communication, sunrise, Tango, Telenor Mobil, Telus, Teson, TI, TIM, T-Mobile, UTStarcom, Vacom, Verizon Wireless, VK, Vodafone, Wind.

List of Figures
Figure 1 The Worldwide and Taiwanese Mobile Phone Industry's Shipment Volume, 1Q 2002 - 1Q 2004

Figure 2 The Taiwanese Mobile Phone Industry's Shipment Volume, 1Q 2002 - 1Q 2004

Figure 3 The Taiwanese Mobile Phone Industry's Shipment Value and ASP, 1Q 2002 - 1Q 2004

Figure 4 The Taiwanese Mobile Phone Industry's Product Mix, 1Q 2002 - 1Q 2004

Figure 5 The Taiwanese Mobile Phone Industry's Product Mix by Shipment Share, 1Q 2002 - 1Q 2004

Figure 6 The Taiwanese Mobile Phone Industry's Smartphone Shipment Share by Operating System, 1Q 2002 - 1Q 2004

Figure 7 The Taiwanese Mobile Phone Industry's Shipment Share by Display Type, 1Q 2002 - 1Q 2004

Figure 8 The Taiwanese Mobile Phone Industry's Shipment Share by Display Color Count, 1Q 2003 - 1Q 2004

Figure 9 The Taiwanese Mobile Phone Industry's Embedded Camera Share, 1Q 2003 - 1Q 2004

Figure 10 The Taiwanese Mobile Phone Industry's Embedded Camera Share by Array Format, 3Q 2003 - 1Q 2004

Figure 11 The Taiwanese Mobile Phone Industry's Shipment Share by Handset Shape, 1Q 2002 - 1Q 2004

Figure 12 Mobile Phone Baseband Solution Providers' Taiwanese Market Share, 1Q 2002 - 1Q 2004

Figure 13 Mobile Phone Transceiver Solution Providers' Taiwanese Market Share, 1Q 2002 - 1Q 2004

Figure 14 Mobile Phone Power Amplifier Suppliers' Taiwanese Market Share, 1Q 2002 - 1Q 2004

Figure 15 The Taiwanese Mobile Phone Industry's Shipment Volume by Production Location, 1Q 2002 - 1Q 2004

Figure 16 The Taiwanese Mobile Phone Industry's Shipment Share by Production Location, 1Q 2002 - 1Q 2004

Figure 17 The Taiwanese Mobile Phone Industry's Shipment Volume by Assembly Level, 1Q 2002 - 1Q 2004

Figure 18 The Taiwanese Mobile Phone Industry's Shipment Share by Assembly Level, 1Q 2002 - 1Q 2004

Figure 19 The Taiwanese Mobile Phone Industry's Shipment Volume by Business Type, 1Q 2002 - 1Q 2004

Figure 20 The Taiwanese Mobile Phone Industry's Shipment Share by Business Type, 1Q 2002 - 1Q 2004

Figure 21 The Taiwanese Mobile Phone Industry's Shipment Volume by Customer Region of Origin, 1Q 2002 - 1Q 2004

Figure 22 The Taiwanese Mobile Phone Industry's Shipment Share by Customer Region of Origin, 1Q 2002 - 1Q 2004

Figure 23 The Taiwanese Mobile Phone Industry's Shipment Share by Customer, 1Q 2002 [ 1Q 2004

Figure 24 The Taiwanese Mobile Phone Industry's Share of Motorola Shipments and Profit Performance Comparison, 1Q 2002 - 1Q 2004

Figure 25 The Taiwanese Mobile Phone Industry's Share of Sony Ericsson Shipments and Profit Performance Comparison, 1Q 2002 - 1Q 2004

Figure 26 The Taiwanese Mobile Phone Industry's Share of Siemens Shipments and Profit Performance Comparison, 1Q 2002 - 1Q 2004

Figure 27 The Taiwanese Mobile Phone Industry's Share of Alcatel Shipments 1Q 2002 - 1Q 2004

Figure 28 The Taiwanese Mobile Phone Industry's Share of Panasonic Shipments, 1Q 2002 - 4Q 2003

Figure 29 The Taiwanese Mobile Phone Industry's Share of LG Shipments and Profit Performance Comparison, 1Q 2002 - 1Q 2004

Figure 30 The Taiwanese Mobile Phone Industry's Shipment Destinations, 1Q 2002 - 1Q 2004

Figure 31 Taiwanese Mobile Phone Manufacturers' Shipment Volume by Tier, 1Q 2002 - 1Q 2004

Figure 32 Taiwanese Mobile Phone Manufacturers' Shipment Volume Share by Tier, 1Q 2002 - 1Q 2004

Figure 33 The Taiwanese Mobile Phone Industry's First Tier Product Mix, 1Q 2002 - 1Q 2004

Figure 34 The Taiwanese Mobile Phone Industry's First Tier Product Mix Share, 1Q 2002 - 1Q 2004

Figure 35 The Taiwanese Mobile Phone Industry's Second Tier Product Mix, 1Q 2002 - 4Q 2003

Figure 36 The Taiwanese Mobile Phone Industry's Second Tier Product Mix Share, 1Q 2002 - 1Q 2004

Figure 37 The Taiwanese Mobile Phone Industry's Shipment Volume, 1Q 2003 - 4Q 2004

List of Tables
Table 1 Taiwanese Mobile Phone Manufacturers' Rankings by Tier, 1Q 2002 - 1Q 2004

Table 2 Cooperative Links Between Mobile Phone Vendors and Operators

WCDMA: First Mover Advantage

2.5G systems, namely GPRS/CDMA2000 1X, are emerging as mainstream handset standard worldwide, amid increased replacement demand arising from mobile data services in Western Europe and MNP services in North America. Japanese and Korean vendors such as Samsung, LG, NEC, Panasonic, and Sharp, which enjoy advantages in the consumer electronics segment and key component supply, continue developing 2.5G handsets. They have obtained market leadership in multimedia phones, which incorporate different form factors, camera, camcorder, color display, and MP3.

To attain the initiative in the WCDMA development, these vendors first worked with solution providers such as Qualcomm and EMP and are now seeking to partner with operators in Western Europe. Currently, such partnerships can be seen between Samsung and Vodafone, between LG and Hutchison and Orange, and between NEC and Hutchison.

Table 2	Cooperative Links Between Mobile Phone Vendors and Operators
Mobile Phone Vendor		WCDMA Model	Operator
Motorola		A835	Hutchison
		A920
		A925
		A1000	N/A
		E1000
		V1000
Nokia		6650	Vodafone K.K ., Tango
		7600	T-Mobile
Sony Ericsson		Z1010	Vodafone live!
Siemens		U10	Mobilkom Austria
		U15	N/A
LG		K8000	SK Telecom, KTF
		U8100	Orange
		U8110	Hutchison
		U8150	N/A
Samsung		Z100	SK Telecom, KTF
		Z105	Vodafone
		W110 (WCDMA/CDMA 2000)	N/A
NEC		e808	Hutchison
		e606
		e616
		e613
Sanyo		V-SA701	Vodafone K.K.
		V-801SA
Sharp		V-801SH	Vodafone K.K.
Panasonic		FOMA 900 series	DoCoMo
NEC
Sharp
Fujitsu
Source: MIC, July 2004

2G/2.5G: Branded Expansion

In response to inventory pile-ups, intense competition, and regulations on knock-down kits in the Chinese market, Korean and Taiwanese ODMs started to reposition strategies. Except for Sewon, which saw financial difficulties, Korea's second-tier makers such as Pantech, VK, and Teson all aggressively developed branded business and explored overseas markets to spread risks of over-reliance on Korea and China. VK supplied to Vodafone in Western Europe, while Pantech supplied to Verizon, Sprint, and Bell Mobility. Furthermore, these makers are entering emerging markets such as Russia and Southeast Asia.

Chinese makers TCL and Bird are expected to expand international business by leveraging the global mobile phone network of their partners, Alcatel and Siemens respectively. Taiwanese makers are anticipated to remain on their OEM/ODM track. However, faced with China's shrinking demand for knock-down kits, Taiwanese makers not only develop branded handsets, but also have sought cooperation with West European operators. On the other hand, Taiwanese makers are expected to supply modules to Chinese makers or forge strategic alliances with Chinese branded makers.

As mobile phone systems have progressively migrated from 2G to 3G, first-tier makers in East Asia such as Samsung, LG, and NEC are aggressively entering the multimedia handset segment. They are also looking to set up cooperative ties with operators for WCDMA handset business. By leveraging their expertise and experiences in the consumer electronics segment, East Asian first-tier makers are gradually closing their gap with the first-tier makers in the US and Europe.

Amid intensifying competition, Korean ODMs are developing branded business to tap into oversea markets with high-price offerings. First- and second-tier Taiwanese makers also cultivate the branded segment to stay competitive. They continue receiving orders from international vendors, while exploiting massive scale to develop high value-added devices such as Smartphones and WCDMA handsets.

Appendix

Definitions

Business Types

OEM

The OEM (Original Equipment Manufacturing) business model entails carrying out product manufacturing or assembly according to specifications supplied by the customer. The OEM business model emphasizes production efficiency; thus, in order to lower costs, customers outsource manufacturing to OEM providers. This cooperation forms a division of labor among design, manufacturing, and sales.

ODM

The ODM (Original Design Manufacturing) business model entails undertaking product design and manufacturing, but not direct retail sales or brand promotion. ODM providers either collaborate with customers on product specifications or independently design products according to customer specifications; the ODM provider then receives manufacturing orders upon customer approval. The ODM model links the sales capabilities of the ODM customer and the design and manufacturing capabilities of the ODM provider, developing a cooperative division of labor throughout the product's value chain.

Form Factor

Full System

Handsets that contain all components mounted on PCB (Printed Circuit Board) as well as complete assembly of peripheral components. Ready for immediate use after shipment to the customer.

SKD (Semi-Knock-Down)

PCB-mounted components and several other major components, such as battery and cover, are shipped disassembled to customer. The customer performs simple final assembly.

CKD (Complete-Knock-Down)

Components are shipped to customer. Customer performs surface mount and final assembly.

Glossary of Terms

ASP		Average Selling price
BRIC		Brazil, Russia, India, and China
CDMA		Code Division Multiple Access
CKD		Complete-Knock-Down
EMS		Electronics Manufacturing Service
GPRS		General Packet Radio Service
GSM		Global System for Mobile Communications
MNP		Mobile Number Portability
MP		Mega Pixel
ODM		Original Design Manufacturing
OEM		Original Equipment Manufacturing
PA		Power Amplifier
PAS		Personal Assess System
PCB		Printed Circuit Board
PDC		Personal Digital Cellular
RF		Radio Frequency
SKD		Semi-Knock-Down
TD-SCDMA		Time Division Synchronous Code Division Multiple Access
TDMA		Time Division Multiple Access
UMTS		Universal Mobile Telecommunications Service
VGA		Video Graphics Array
WCDMA		Wideband Code Division Multiple Access

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