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China's Mobile Phone Industry Chain in 2005
China's Mobile Phone Industry Chain in 2005
- Report price : $ 3 631
- Publication date : September 2005
- Length : 535 pages
China's Mobile Phone Industry Chain in 2005
2005 saw a big change in the mobile phone industry in China. There were two reasons, one was that most of home-grown mobile phone manufacturers reported red, and the other was that the hardware configurations and functions of mobile phone had changed. The sharp decrease of market share, and the remaining stocks caused a sharp decrease of demand for upstream products, and made home-grown manufacturers have more concern about the upstream costs.
Among upstream manufacturers whose main clients are home-grown mobile phone manufacturers, design houses are the most prominent. Domestic design houses got a rapid progress in 2004 since home-grown mobile phone manufacturers had occupied a large share in mobile phone market in 2003, and broke down their Korean counterparts. The effect that mobile phone manufacturers have on upstream design houses has generally a 6-month lag. 80% of the orders came from home-grown mobile phone manufacturers, while foreign manufacturers just ordered low-end handsets. Aware of the forthcoming problems, design houses have been trying to go public to solve the capital problem. And the design of 3G phone requires a large mount of investment. Therefore, design houses have to set up sound financing channels for long-term development. Most of the design houses found new investors, and going public was their ultimate aim. Various factors pushed design houses to go public one after another, and those which were not able to go public started to go bankrupt or to be merged and acquired.
Handset display entered the TFT-LCD era in 2005, putting an end to the STN-LCD end. Previously, there were numbers of STN-LCD manufacturers whose main clients were home-grown mobile phone manufacturers, but in TFT-LCD era all these manufacturers have been out of the game. According to public sources, there are not any small-size TFT-LCD Panel manufacturers in China, and the number for the module manufacturers is also quite low. Among these module makers, Truly Semiconductors occupies the dominant place. Truly Semiconductors has the largest productive capacity of TFT-LCD module, provides homochromy and color STN-LCD and OLED, and holds the most complete product line of LCD. Without TFT-LCD panel product line, Truly Semiconductors' profit must be extracted. But Truly Semiconductors qualifies for being proud compared with other manufacturers.
Pursuing low cost generated a number of business opportunities, such as baseband IC, which was dominated by TI, Agere, Philips and Freescale previously. These giant companies, which paid little attention on China's handset manufacturers, sold baseband products to home-grown manufacturers at a high price, which made them greatly unsatisfied. Once a substitution supplier appeared, these handset manufacturers immediately turned to it. Media Tek Inc., which is the No. 1 IC company, was this substitution supplier. Media Tek Inc. occupied mainland market by its low-cost baseband IC immediately, and most of China's handset manufacturers including ASUS and BenQ became its clients. The average monthly shipment of handset baseband IC reached 2 million. In the market of home-grown manufacturers Media Tek Inc. accounted for more than 60%, striking TI heavily. In the first half of 2005 the company's gross profit margin reached 55% and EBIT hit 7.1 billion TWD.
Most of the upstream manufacturers haven’t been influenced by the poor performance of domestic mobile phone manufacturers, especially for the Taiwan-based providers of PCB, passive component, camera phone module and ODMs. The entire China's mobile phone industry has still developed healthily and growth rate has never been slowing down.
As for ODMs, most of Taiwan-based ODMs including Compal, Arima, BenQ and Quanta are unwilling to take orders from mainland handset manufacturers nowadays, though the four companies accepted orders from mainland handset manufacturers previously. Since 2005, in order to control production cost, mainland manufacturers have never given orders to these ODMs, and these ODMs are unwilling to take their orders because of poor profit. Arima's main clients include NEC and Sony Ericsson, Compal has Motorola, while Quanta has Panasonic. After losing orders from Motorola, BenQ's handset operations shrank heavily, but it will have a great potential after the acquisition of Siemens. It was estimated the shipment of mobile phones from Compal would reach 30 million, and its Nanjing-based factory would be the No. 1 handset production base in the world.
In the first half of 2005, most of home-grown mobile phone manufacturers reported poor performance. Meanwhile, some have the consciousness of upgrading their own technology strength, and strive to work out primary OEM pattern through design houses. None of home-grown mobile phone manufacturers can gain a significant increase of market share without the accumulation of technologies.
The adaptation ability of a company determines its existence. Those which can't adapt to the changes of industry and market will finally die out. Based on the Mobile Phone Industry Chain 2004, Pday Research added Mobile Phone Industry Chain in China 2005 to its offerings.
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