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China handset industry production declines more than 15% in 1Q09, says MIC

In the first quarter of 2009 China handset industry production volume reached 135.4 million units, down 12.7% on year, according to Taipei-based Market Intelligence & Consulting Institute (MIC). Due to the effects of the global financial crisis, sales of global first-tier vendors fell significantly in the first quarter, and the China industry's production volume declined 15.5% sequentially in the first quarter of 2009 following an 8.5% sequential decline in the fourth quarter of 2008. This marked the first time since 2003 that the industry experienced two consecutive quarters of sequential decline.

Global sales of first-tier handset brands were relatively weak in the first quarter, and their production volume in China declined 15.7% sequentially in the first quarter of 2009 to 73.8 million units. Their share of total production volume in China's industry fell from 54.7% in the fourth quarter of 2008 to 54.5% in the first quarter of 2009.

Taiwan manufacturers were impacted by weak sales of their major clients Motorola and Sony Ericsson, as well as declines in Apple iPhone 3G shipments during the transition to the iPhone 3G S. As a result, Taiwan manufacturers' production volume in China reached only 14.8 million units in the first quarter of 2009, falling 35.6% sequentially. Their share of total China industry production volume fell from 14.3% to 10.9%.

China makers enjoyed shipment growth stimulated by the rural home appliance subsidy program of the China government. The production volume of China manufacturers reached approximately 46.8 million units in the first quarter of 2009, falling only 5.8%.

As for the second quarter of 2009, it is unlikely that major global vendors' shipments will see large-scale increases. It is expected that production volume of the China handset industry will reach 147.2 million units in the second quarter of 2009, growing 8.7%.

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