Low-cost phones soar in China

The market for ultralow-cost handsets is beginning to take off faster than expected in China. And as it grows, chipmakers lacking single-chip solutions will face increasing pressure to compete with those that have them.

Originally, ultra low cost phones weren't expected to do that well in the country. Top-tier phone makers were focusing more on other developing markets, such as India, and some chipmakers also believed that Chinese consumers wouldn't buy the no-frills, voice only models.

However, dirt-cheap handsets are popping up on the streets in China, as telecom operators shift their growth strategy to rural areas. ''That's where a significant part of China Mobile's growth is coming from, so they are buying ultra low cost handsets for their sales channels and also targeting advertising campaigns at poorer rural villages,'' said Ted Dean, an analyst at Beijing-based BDA China Ltd.

ULCH shipments in China will soar this year to more than 1 million units in 2006. That's up from only about 1,000 in 2005, according to market researcher iSuppli Corp. The firm believes the market will expand to 14.7 million units by 2010, accounting for 10 percent of domestic shipments, up from 1 percent this year.

- Mark LaPedus
EE Times