Research Reports
The Chinese Mobile Phone Industry, 1H 2004 and Beyond
August 12, 2004 / Sean Kao
24 Page, Statistics Report
US$1,450 (Single User License)

Abstract

Near the end of June 2004, the Chinese government promulgated Document No. 412, terminating the necessity for mobile phone manufacturers to apply for production licenses. The good news did not make companies waiting for a production license shout for joy. There remain hidden obstacles such as product inspection and the need to apply for network access licenses. Price competition is intense, inventory levels are high in the channels, and banks have been refusing financing to mobile phone channel players; PAS network infrastructure remains insufficient as well. As a result, the Chinese mobile phone industry's growth rate failed to meet expectations in the second quarter of 2004. As the industry moves the peak season in the second half, these issues will continue to impact shipment volume.
  •  List of Topics
  •  List of Figures
  •  List of Tables

With the Chinese government holding off the issuing of 3G licenses, China Telecom and China Netcom are expected to continue focusing on developing their PAS business, a form of mobile service where the investment can be recouped quickly. The impressive growth in the low-frequency mobile phone business can be expected to continue for another one or two years yet, ensuring PAS handsets' continuing growth in the share of the mobile phone industry's total shipment volume.

Given that local Chinese handset makers are working aggressively to build up their own R&D capabilities, chip suppliers now need to focus on two areas to expand market share. Their R&D and design teams will need to provide rapid service for the handset assemblers. They will also need to build strategic alliances with handset design firms.

Chip suppliers, handset design firms, and mobile phone assemblers are all having difficulty recruiting the talent they need. This and the problems of high salaries and high employee turnover will continue for some time to come. However, if the Chinese handset makers fail to solve problems with intellectual property rights, or fail to establish a powerful international marketing capability, the weaker firms will eventually be weeded out. Only then will the shortage of talent be resolved.

Appendix

Research Scope

This report covers major companies manufacturing mobile phones in China for the domestic market or export, including output from domestic makers, foreign direct invested entities, and joint ventures. Handset statistics include GSM, GPRS, CDMA, Smartphone, and PAS phones, where full system assembly is completed in China.

Definitions

Assembly Levels

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

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

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

Glossary of Terms

3G

 

Third Generation Mobile Communications

CDMA

 

Code Division Multiple Access

CKD

 

Complete-Knock-Down

DSLAM

 

Digital Subscriber Line Access Multiplexer

GPRS

 

General Packet Radio Service

GSM

 

Global System for Mobile Communications

IC

 

Integrated Circuit

MIMO

 

Multiple Input/Multiple Output

PAS

 

Personal Access Phone System

PCB

 

Printed Circuit Board Assemblies

PCBA

 

Printed Circuit Board Assembly

PHS

 

Personal Handyphone System

R&D

 

Reasearch and Development

RF

 

Radio Frequency

SARS

 

Severe Acute Respiratory Syndrome

SKD

 

Semi Knock Down

SMT

 

Surface Mount Technology

TD-CDMA

 

Time Division CDMA

TFT

 

Thin Film Transistor

WCDMA

 

Wideband Code Division Multiple Access

 

To get MIC's complete insight, please log in.