China’s Handset Market Expansion Continues in 2009
Service fee cuts promote new sales
Defying an expected 5 percent decline in global mobile handset shipments, China’s domestic wireless phone market is set to maintain its growth in 2009, with a 7 percent increase for the year, according to iSuppli Corp. iSuppli forecasts the domestic handset market will reach 240 million units in 2009, up 7 percent from 2008.
China’s three wireless operators are attracting new subscribers by reducing service fees. This will greatly contribute to demand from first-time buyers. New subscribers are expected to exceed 90 million in 2009. Furthermore, more existing mobile users will be subscribe to a second number. Beyond that, the government’s broadened subsidy policy for consumer electronics purchases will stimulate demand in rural areas.
Domestic authorized handset market shipments are expected to surpass 180 million units for 2008. Meanwhile, the domestic gray market should decrease to 40 million units for 2008 from over 50 million units in 2007. A number of gray market suppliers became authorized brand name companies. Their business grew dramatically in tier-three and tier-four urban and rural markets.
Foreign handset OEMs should occupy 56 percent of China’s handset market for 2008. Nokia will be the largest handset supplier in China with a 37 percent final market share anticipated. At the same time, Samsung expanded its share as handset shipments from Motorola and Sony Ericsson kept falling.
Tianyu will continue to be the leading Chinese brand in terms of domestic shipments. Changhong, BBK, Goinee and Lenovo also demonstrated good performances in 2008. However, tier-two Chinese brands, such as Amoi and Bird, are facing more serious challenges ahead.
There is no doubt that the Chinese government finally will issue 3G licenses in 2009. However, domestic 3G handset shipments will not increase dramatically.
The total domestic 3G handset market is expected to reach 8 million units in 2009. Low-cost multimedia GSM and ultra-low-cost CDMA handsets should be among the best-selling products of 2009. However, smart phones and handsets supporting 3G and the China Mobile Multimedia Broadcasting (CMMB) standard also will represent high growth segments. In term of total unit shipments, Huawei and ZTE are likely to be the leaders in China’s handset market. Both were anticipated to ship more than 30 million units in 2008. Moreover, Huawei is now the largest 3G data card supplier in the world. At the time this was written, Chinese handset manufacturers collectively were projected to ship more than 300 million handsets by the end of 2008. iSuppli forecasts that Chinese handset manufacturers will ship more than 360 million units in 2009 driven by both domestic and export markets.
Shanghai-based handset design house Longcheer returned as the largest Chinese handset design house in 2008 with total shipments of about 18 million units. Wingtech, the second largest design house, saw its business decline sharply in the second half of 2008. Chinese handset design houses will ship more than 130 million units in the form of open bills of material or mainboards.
Taiwan-based handset baseband supplier MediaTek continues to expand its market share in China. Competitors, including Infineon, Spreadtrum and NXP, were projected to threaten its market share in 2008. However, MediaTek actually increased its GSM baseband market share to more than 70 percent in 2008, versus 62 percent in 2007. Meanwhile, Qualcomm dominated the WCDMA/HSDPA and CDMA baseband markets. iSuppli does not expect major changes in the baseband market during 2009.
Defying an expected 5 percent decline in global mobile handset shipments, China’s domestic wireless phone market is set to maintain its growth in 2009, with a 7 percent increase for the year, according to iSuppli Corp. iSuppli forecasts the domestic handset market will reach 240 million units in 2009, up 7 percent from 2008.
China’s three wireless operators are attracting new subscribers by reducing service fees. This will greatly contribute to demand from first-time buyers. New subscribers are expected to exceed 90 million in 2009. Furthermore, more existing mobile users will be subscribe to a second number. Beyond that, the government’s broadened subsidy policy for consumer electronics purchases will stimulate demand in rural areas.
Domestic authorized handset market shipments are expected to surpass 180 million units for 2008. Meanwhile, the domestic gray market should decrease to 40 million units for 2008 from over 50 million units in 2007. A number of gray market suppliers became authorized brand name companies. Their business grew dramatically in tier-three and tier-four urban and rural markets.
Foreign handset OEMs should occupy 56 percent of China’s handset market for 2008. Nokia will be the largest handset supplier in China with a 37 percent final market share anticipated. At the same time, Samsung expanded its share as handset shipments from Motorola and Sony Ericsson kept falling.
Tianyu will continue to be the leading Chinese brand in terms of domestic shipments. Changhong, BBK, Goinee and Lenovo also demonstrated good performances in 2008. However, tier-two Chinese brands, such as Amoi and Bird, are facing more serious challenges ahead.
There is no doubt that the Chinese government finally will issue 3G licenses in 2009. However, domestic 3G handset shipments will not increase dramatically.
The total domestic 3G handset market is expected to reach 8 million units in 2009. Low-cost multimedia GSM and ultra-low-cost CDMA handsets should be among the best-selling products of 2009. However, smart phones and handsets supporting 3G and the China Mobile Multimedia Broadcasting (CMMB) standard also will represent high growth segments. In term of total unit shipments, Huawei and ZTE are likely to be the leaders in China’s handset market. Both were anticipated to ship more than 30 million units in 2008. Moreover, Huawei is now the largest 3G data card supplier in the world. At the time this was written, Chinese handset manufacturers collectively were projected to ship more than 300 million handsets by the end of 2008. iSuppli forecasts that Chinese handset manufacturers will ship more than 360 million units in 2009 driven by both domestic and export markets.
Shanghai-based handset design house Longcheer returned as the largest Chinese handset design house in 2008 with total shipments of about 18 million units. Wingtech, the second largest design house, saw its business decline sharply in the second half of 2008. Chinese handset design houses will ship more than 130 million units in the form of open bills of material or mainboards.
Taiwan-based handset baseband supplier MediaTek continues to expand its market share in China. Competitors, including Infineon, Spreadtrum and NXP, were projected to threaten its market share in 2008. However, MediaTek actually increased its GSM baseband market share to more than 70 percent in 2008, versus 62 percent in 2007. Meanwhile, Qualcomm dominated the WCDMA/HSDPA and CDMA baseband markets. iSuppli does not expect major changes in the baseband market during 2009.
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