Abstract

Korean Makers Lead in TD-SCDMA Mobile Phones

As of mid-2006, Korean manufacturers Samsung and LG remained as the lead in TD-SCDMA mobile phone development. This was mainly due to Korean makers' early startup in the TD-SCDMA mobile phone market. Therefore, they were able to start TD-SCDMA CPE R&D ahead of other vendors. In addition, the collaborative relationships they established in the 2G era enabled them to gain support from major upstream chip suppliers.

As China has been postponing the release of 3G licenses, European and US mobile phone vendors such as Nokia, Motorola, and Sony-Ericsson have therefore found it difficult to get into the Chinese market. Some of these vendors have invested in TD-SCDMA chip designers in a bid to control IC technology; examples include Nokia's investment in Commit and Motorola in T3G. The others have not made any clear moves in the market, such as Sony Ericsson.

Nokia currently leads the GSM/GPRS market with more than 30% share in the global market, outpacing Motorola in second place. As WCDMA will become the mainstream 3G standard worldwide, while TD-SCDMA is likely to be confined to China only, where the market scale is relatively limited compared to the global market, Nokia decided to fade out of the CDMA market in mid-2006 and place more emphasis on WCDMA. In the short term, due to market scale and cost considerations, Nokia is likely to adopt an ODM (Original Design Manufacturing) strategy with TD-SCDMA development, the same approach it adopted for its CDMA business. In the long term, whether or not Nokia will change this strategy will depend on TD-SCDMA market growth and scale.

Sony-Ericsson is similar to Nokia in the sense that its next-generation mobile phones will also focus on WCDMA. In addition, Sony-Ericsson is different to other major international vendors such as Motorola and Samsung in that it does not wish to challenge Nokia's leading market position. On the other hand, Sony-Ericsson focuses on keeping a certain market share while using series of product lines to grab the mid-range and high-end market and increase profit. An example of this strategy was the success of Sony-Ericsson's Walkman series. In the value-line market, Sony-Ericsson has adopted an ODM business model. As support for high-end and mid-range TD-SCDMA mobile phones remains immature, and applications are still underdeveloped, Sony-Ericsson's cautious approach is understandable. In the short term, Sony-Ericsson will keep its conservative approach to TD-SCDMA. In the case that Sony-Ericsson does decide to get involved, they are expected to adopt similar strategies to Nokia's.

Appendix

List of Companies