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Taiwan to Capture More Cellular Handset Market Share

25th October , 2004

US : The maturity of wireless handset technology will continue to drive horizontal trends in Chinese and global supply chains, giving greater opportunities to ODMs in Taiwan.

This is the conclusion reached by ABI Research's Asia analyst, Junmei He, who reports that in 2003, wireless handset shipments in China reached 183 million units. However, she notes, behind that large figure are Chinese government policies that protect domestic wireless handset makers.

Under the policy, only enterprises holding production licenses can make wireless handsets. This policy helped domestic players to gain significant market share; but it also generated serious side effects for the domestic players, such as a strong reliance on wireless ODM handset makers in Taiwan and Korea.

To lessen that reliance and encourage domestic R&D, the Chinese government increased the tariff on complete wireless handset imports, which directly resulted in a sharp decline in handset imports in the second half of 2003 and first half of 2004.

"Just across the strait from mainland China," says He, "the wireless handset industry in Taiwan is a different story. Taiwan has traditionally had a strong IT industry, and now aims to win first place among ODM wireless handset production facilities. ABI Research expects wireless handset shipment from Taiwan's ODMs to reach 60 million in 2005."

So near to China, Taiwanese ODMs benefit on the one hand from the huge demand from the mainland, but on the other hand are constrained by the Chinese government's policies. In Taiwan, only DBTEL won a license to produce and sell DBTEL branded wireless handsets in China. BenQ, whose license was obtained by a joint venture with a local Chinese license holder, runs a close second.

ABI Research's report, "The Chinese & Taiwanese OEM/ODM Handset Markets" analyzes the latest news in the wireless sector in China, the regulatory environment, and related operating data.

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