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CCID: Steady growth seen for China mobile market

Posted: 23 Jul 2008 ?? ?Print Version ?Bookmark and Share

Keywords:China mobile market? mobile chip? handset?

A new report from CCID Consulting on China's handset and mobile chip market stated that mobile phone output continued to grow in 2007, reaching 554 million sets, with a growth rate of 25.4 percent, driven by export and domestic demands.

Handset export in 2007 reached 322 million sets, which accounts for 58.2 percent of total cellphone output. China's cellphone manufacturing base is growing with Nokia, Motorola, Samsung and Sony Ericsson transferring their production in the country. This contributes to an expected 26.2 percent increase in China's handset exports. China's domestic mobile phone providers likewise are increasing their capacities, especially ZTE, Huawei and K-Touch.

China's cellphone chip market reached $12.37 billion in 2007, up 23.9 percent over 2006. Mobile phone output is still the main factor driving the chip market but handset upgrade, new functions, new applications and single chip product promotion also contribute in the market growth.

Breaking down the cellphone's application structure, baseband processor module has the largest share, which accounts for 26.5 percent. With multimedia functions becoming more sophisticated, multimedia chips' hold 21.6 percent. Although cellphones' storage increases, affected by price drops, storage slipped from 24.2 percent in 2006 to 19.4 percent in 2007.

CCID also notes rapid development of 3G market in the next few years with Qualcomm leading the chip application market. Meanwhile, China's domestic mobile chip providers, having a late start, still have their products focus on mobile phone multimedia chip, such as MP3 decoder chip, image processor chip and chord chip. Local chipmakers' downstream customers are domestic mobile phone production enterprises and will find it is difficult to penetrate supply systems of international mobile phone manufacturers such as Nokia and Motorola.

Nevertheless, CCID projects that with the increase of domestic handset output and the development of multimedia handset and 3G services, local mobile chip manufacturers have great potential over the next few years. 3G, multimedia application and smart phones are not only impetus of the mobile chip market, but also the development opportunities for domestic chip manufacturers, the report added.

China's mobile chip market will follow China's mobile phone output and enter steady growth, CCID said. China's mobile phone chip market will break through $14.66 billion in 2009 and reach $21.41 billion in 2012, the report forecasts.

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