Touchscreen mobile phones: Added value stimulates rising popularity

Feature-packed models integrate dual SIM slots, a megapixel camera, a mobile TV, a multimedia player and Bluetooth connectivity.

Suppliers of mobile phones in China are increasingly adopting touchscreen technology under efforts to add value and improve their market position. Riding on strong iPhone sales and growing demand for similar products from Nokia, LG, and HTC and its subsidiary Dopod, many makers are projecting that such handsets will be a key trend in the next few years.

Touchscreen mobile phones More companies are keen to change their low-end ranking and believe that developing upscale units such as touchscreen phones will help them penetrate the midrange or high end. They expect these models to eventually boost sales, which are forecast to dip this year.

IDC projects that the global market will register -8.3 percent growth in 2009. The outlook is based on a dismal 4Q08, during which worldwide shipments fell 11.6 percent YoY, the fist time in seven years that the holiday period did not record a double-digit increase.

China remains the largest manufacturing base for handsets worldwide with a 50 percent output share, but suppliers anticipate a slight downturn in production and exports as consumer spending slows. Data from the Ministry of Industry and Information reveals that the turnout in the first two months of 2009 totaled 79.67 million units, an 11.2 percent decrease from the same period last year. Overseas shipments declined by 17.2 percent in January-February.

Some companies said they reduced their export volumes by 30 to 50 percent in recent months. Shenzhen Yingtailong Technology Co. Ltd, for instance, now ships only 35,000 to 50,000 units, half of its monthly average in early 2008.

The minimum requirement has also dropped from 2,000 pieces at the end of last year to just about 500 as of March. Some overseas clients have lowered their order quantities from 10,000 to 5,000 phones.

In addition to slumping sales, tighter competition could lead to a consolidation that might push smaller companies out. Makers said even large enterprises are reporting losses because of the rising manufacturing costs amid thinning margins.

Several suppliers have announced plans to reduce output this year to avoid increasing outlay further. A few are concerned about expanding their inventory in the face of declining demand. Some are hoping that the central government’s revitalization plan for the electronics industry will spur sales and bolster eroding margins. Under this program, mobile phones are entitled to a 17 percent export-tax rebate.