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Handset demands set momentum for China ODM

Posted: 01 Nov 2005 ?? ?Print Version ?Bookmark and Share

Keywords:mobile handset? wireless communications module? sim technology group?

Mobile handset and wireless communications module developer SIM Technology Group Ltd is optimistic about mainland China's bright future in the mobile-phone industry as it announces a 125 percent increase in company profits for the first half of 2005.

SIM Technology's newly-appointed CEO Raymond Tsang said that "China's handset demand continues to grow by 15 percent year-on-year, and the outlook for the rest of 2005 and 2006 continues to be strong." He refuted reports that China's handset market is weak due to poor design performance of local manufacturers.

The independent handset design house was able to reap a net profit of $14.1 million in the first half of 2005, vs. $6.3 million in the same period in 2004. The company attributes its 60 percent total turnover growth to the strong handset demand growth in China.

"The growth was generated by new subscribers and replacement markets. Based on the latest report from China Center for Information Industry Development, the volume percentage of handset demands in China remains the strongest for midranged mobile handsets, which represent over 50 percent of the total market," said Tsang.

Midrange and high-end phones are the focus of technology development for SIM Technology. These handsets have various multimedia features that follow the functions of smart portable devices.

SIM Technology started as a semiconductor distributor for the wireless communication market in China under the name of Sunrise Technology. "The company has been serving the mainland market for a long time and it has seen the evolution of the telecom industry," said Tsang.

Unique business model

Tsang said that SIM Technology uses the "one-to-many approach" in developing motherboards for GSM handsetsi.e. GSM motherboard platforms are standardized for a particular kind of phone to be used by several customers.

"Product differentiation mostly relies on branding, image, style and mechanical casing design, rather than the internal motherboard. Customers don't mind that they use the same motherboard for months. There is no difference if they use the same chip because the motherboard becomes one single component," said Tsang.

He believes that by using this business model, customers save on motherboard R&D expenses and lower the breakeven point for each phone model the customer develops. This brings a time-to-market advantage, as a complete phone design is guaranteed within 12 weeks.

"We are reshaping the supply chain flow of the handset industry in China. Other design houses are forced to follow our model because it is well-received by our customers. Our advantage is that we come with 20 years of supply chain experience," said Tsang.

- Reden Mateo

Electronic Engineering Times-Asia

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