China Mobile Phone Manufacturing Dropped by 12.7% in Q1

China's mobile phone production dropped by 12.7% in Q1 '09 compared to a year ago, reports the Taipei-based Market Intelligence & Consulting Institute (MIC). Total handset manufacturing volume was 135.4 million units in the three months.

Due to the effects of the global financial crisis, sales of international brand-name vendors fell significantly in the first quarter, and the Chinese industry's production volume declined 15.5% sequentially in the first quarter of 2009 following an 8.5% sequential decline in the fourth quarter of 2008. This marked the first time since 2003 that the industry experienced two consecutive quarters of sequential decline.

Global sales of major international mobile phone brands were relatively weak in the first quarter, and their production volume in China declined 15.7% sequentially in the first quarter of 2009 to 73.8 million units. Their share of total production volume in China's industry fell from 54.7% in the fourth quarter of 2008 to 54.5% in the first quarter of 2009.

As for Taiwanese manufacturers, besides being impacted by their major clients Motorola and Sony Ericsson, the Apple iPhone 3G experienced shipment declines as a transition period started in the first quarter in anticipation of the market launch of the iPhone 3GS. As a result, Taiwanese manufacturers' production volume in China reached only 14.8 million units in the first quarter of 2009, falling 35.6% sequentially. Their share of total Chinese industry production volume fell from 14.3% to 10.9%.

The rural home appliance subsidy program of the Chinese government has stimulated shipments of Chinese companies that won tenders for the program. The effect of the program was especially evident in second- and third-tier cities and smaller cities. The production volume of Chinese manufacturers in China's industry reached approximately 46.8 million units in the first quarter of 2009, falling only 5.8%.

As for the second quarter of 2009, even though Chinese makers were replenishing inventories in anticipation of the May 1 holiday, the cancellation of the extended holiday period around May 1 increased market uncertainties for mobile phone makers. Furthermore, with the economy still in a downturn and the second quarter traditionally being the off-season in mature markets in Europe and the United States, it is not likely that major international vendors' shipment will see large-scale increases in the second quarter. It is expected that production volume of the Chinese mobile phone industry will reach 147.2 million units in the second quarter of 2009, growing 8.7%.

Posted to the site on 24th June 2009