Abstract

As regards baseband IC suppliers, whereas leading international mobile phone vendors such as Nokia, Motorola, Samsung and Sony-Ericsson generally have a stable, long-term relationship with a single baseband solution provider, Chinese mobile phone vendors tend to use multiple suppliers and to change them frequently. Bird has used five different broadband solution providers -TI, Broadcom, NXP, Freescale and Infineon -at various times. This difference is mainly due to the limited R&D capabilities of most Chinese mobile phone vendors, which make them heavily dependent on their IC suppliers. The Chinese vendors' relatively small scale of operation makes it difficult for them to secure comprehensive support from first-tier IC suppliers; as a result, Chinese mobile phone vendors' supply chains are susceptible. This situation has created significant business opportunities for second- and third-tier IC suppliers such as Broadcom, Agere Systems and NXP.

Besides voice service, demand for mobile data services has also been growing steadily in China, driven by aggressive promotion by mobile operators China Mobile and China Unicom. Sales of Smartphones and of mobile phones equipped with GPS, Wi-Fi and mobile TV functionality are expected to increase rapidly in the future. However, most Chinese mobile phone vendors have only limited hardware and software R&D capabilities, and this situation is unlikely to change significantly in the near future. It can be anticipated that vendors will continue to outsource both industrial design and application software design for mid-range and high-end mobile phone models to mobile phone design houses. Mobile terminal software firms seeking to develop the Chinese market will therefore need to focus on building close relationships with local mobile phone design houses.

Appendix

Research Scope

This report examines component supply chains in the Chinese mobile phone industry, focusing on five leading Chinese mobile phone vendors: Lenovo, Bird, Amoi, TCL, ZTE and Huawei.

Glossary of Terms

List of Companies