Taiwan-based manufacturers will be making more than a quarter of all mobile phones within two years, analysts predict.
The number of handsets rolling off production lines in Taiwanese-owned factories, many of them situated in China, will reach 281 million by 2008, according to new forecasts from ABI Research.
As well as manufacturing the phones, Taiwanese firms are taking over an ever-growing percentage of the design burden from brand-name phone vendors, a role referred to as Original Design Manufacturer (ODM).
"Taiwan's ODMs gain cost advantages by setting up plants in mainland China, and their leading role in supplying handset components is helping to improve their cost structure and complete their supply chain," said ABI Research analyst Junmei He.
"Handset shipments from Taiwan will reach 281 million in 2008, 79 percent of which will be ODM handsets, and these shipments will account for 26 percent of total handset shipments globally."
The share of the global market held by Taiwanese firms such as BenQ, Compal Communications and Arima has doubled since 2004, when they produced 70 million handsets and accounted for 12 percent of worldwide unit sales.
The country's phone makers are now generating more than US$2 billion a quarter from sales, according to recent data from the Market Intelligence Centre, a publicly-funded Taiwanese technology think-tank.
Well known brand-name mobile phone vendors that work closely with Taiwanese ODMs include Motorola and Sony Ericsson.
However, some other large vendors, notably Nokia and Samsung, build the majority of their phones in their own factories.
"Industry concentration will become increasingly evident," the Market Intelligence Center warned in a recent report.
"As the private-label market dwindles, and Japanese vendors' market share continues to decline, ODMs failing to receive orders from Motorola or Sony Ericsson will be forced to adjust their strategies or restructure their organisations."
While China is a key manufacturing base for Taiwanese manufacturers, Chinese handset vendors generally cannot justify hiring Taiwanese firms to handle design and manufacturing.
This is because profit margins in the country's cost-conscious mobile market are too thin, ABI's researchers found.
The instability of the market also deters Taiwanese manufacturers from involvement.
Taiwan's phone makers have a presence in China, the world's largest phone market by volume, but it is under their own brand names or as ODMs for overseas vendors.
As well as the handset makers, Taiwan's mobile phone industry supports an extensive network of suppliers including printed circuit board makers and passive component manufacturers.
Taiwan's mobile phone output soars
By Simon Burns on Nov 1, 2006 8:26AM