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Chinese Cell Phone Shipments Expected To Slow

Sales of handsets supporting TD-SCDMA and EDGE are expected to buck the trend and ramp up quickly this year, iSuppli anticipates.
China experienced a huge growth in cell phone shipments last year, but the market is expected to slow considerably this year, hurt by lower consumer confidence, a market researcher said Thursday.

Handset shipments last year reached 229 million units, a 76.2 % increase from the 130 million units shipped in 2006, iSuppli said. This year, however, the rate of growth is expected to fall to 19.7% to 274 million units.

Hampering handset sales this year will be increasing inflation, rising housing prices, and major stock market fluctuations, all of which are expected to shake consumer confidence in China and elsewhere, iSuppli said. In addition, there are no popular features to drive new sales. While new phones will ship with personal navigation systems and mobile TV, those handsets are expected to be too expensive to rise above niche products.

Put it all together, and the replacement market for Chinese phones this year in and outside China will experience very limited growth, which will hold back increases in shipments, iSuppli said.

There were two major drivers behind sales in 2007. First was the high domestic demand from first-time buyers and the replacement market, iSuppli said. The other was a significant increase in export shipments from Chinese handset manufacturers.

Domestic manufacturers Huawei and ZTE doubled their export shipments. Furthermore, domestic gray-market suppliers shipped millions of handsets to developing countries, iSuppli said. In 2007, the domestic Chinese market totaled 200 million handsets, consisting of 150 million licensed phones and 50 million gray-market handsets.

Despite the predicted slowdown, iSuppli anticipates that sales of handsets supporting TD-SCDMA and EDGE will ramp up quickly this year as they become more widely available.

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