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Handset-design industry in the “world’s fastest growing economy” is expected to enter a phase of consolidation this yer due to rapid declining profit margins.
According to data from China-based market research firm ResearchInChina, average gross margins for China-based handset design companies are expected to drift down to 3% in 2008, compared to 5% in 2007 and 15% in 2006.
The reason for declining margins can be explained with two factors: first, more and more international handset vendors are entering the Chinese handset market market; and, on the other side, a lack of production differentiation among handset design companies.
Most handset design companies in China are using MediaTek’s chipset solutions, making them unable to differentiate their products from each other. To be fair, some companies have begun developing more sophisticated products, including dual-mode, GPS-enabled and 3G models as well as smartphones. However, most such devices are unable to reach an economic scale.
Last year, shipments of China-made handsets built using solutions from China handset-design companies totaled about 101 million units in 2007, and are likely to increase to 122 million units in 2008 and 142 million units in 2009.
[Via: DigiTimes]
About The Author
Dusan Belic
Dusan has been using smartphones since their introduction and is now following the latest trends in the industry. The "convergence" is what he's most excited about, and writing about it is the next logical thing to do. He thinks that using a smartphone is what everyone who cares about their time should do. In addition to his interests in mobile phones, Dusan also loves to experiment with the latest web and mobile 2.0 services. The idea of accessing and managing your information from any device no matter where you are simply amazes him. Whether it's an online to-do list, note taking service or a video sharing social network, he's there to try it out. He admits though, he's still searching for the ultimate web-based organizational tool, which "sings" perfectly with the mobile PIM application. Dusan used to run SymbianWatch.com which later became part of IntoMobile. He lives in Serbia, South-East Europe, from where he edits the site on a daily basis.
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