GPRS phones

	The GM-80 from mainland China's Fuyai is a GPRS phone that features a 2.8in touchscreen display, 2MP camera and Bluetooth.

Global mobile phone supply as of end-2007 continued to be dominated by 2.5G models, according to Taiwan's Topology Research Institute (TRI). About 60 percent of global mobile phone shipments supported 2.5G technology, while 32 percent supported 3G. Only 6.5 percent of shipments were 2G and 1.5 percent, 3.5G. TRI predicts that 3G phones will take a few more years before they could start eclipsing the 2.5G sector, with 3G shipment volume likely to overtake 2.5G shipments starting in 2010.

Mobile phone supply in 2008 in Greater China, comprising mainland China, Taiwan and Hong Kong, will continue to be driven by 2.5G phones despite the increasing pace by which manufacturers in the region pursue 3G phone development. Mainland China's shipments, for example, will comprise mostly 2.5G phones, as makers meet strong demand locally and overseas. Although more companies on the mainland are developing 3G phones, delays in the issuance of licenses and the low adoption rates for 3G phones in overseas markets will sustain mainland China's 2.5G sector for the next few years. In the domestic market, GPRS and EDGE mobile phones are expected to prevail. China Mobile alone is scheduled to deploy EDGE network in 50 developed cities across the mainland. In the transition period from 2.5G to 3G, mobile phones featuring dual modes and dual-SIM card support, such as CDMA/GSM and TD-SCDMA/GSM, will gain popularity.

Taiwan's 2.5G mobile phone shipments have been dominated by GPRS models, but trends are pointing to a shift toward EDGE phones, followed by models supporting CDMA and HSDPA. Supply of GPRS phones will not likely drop significantly, however, as many basic and feature phones continue to be based on GPRS. Data from the Market Intelligence Center (MIC) of Taiwan estimated Taiwan's mobile phone shipments in 2007 at about 93 million units, equivalent to nearly 10 percent of the global mobile phone shipment volume.

Hong Kong suppliers offer EDGE and GPRS models. Based on customs statistics, shipments during H1 2007 alone reached 18.6 million units, and total annual shipments in 2007 were estimated to exceed 43.5 million units.

As supply of 2.5G phones continues to rise, value added is increasingly emphasized, a trend that has resulted in blurry distinctions among some high-end, midrange and low-end models. Across Greater China, A/V playback and built-in cameras have become standard. In the case of the latter, makers differentiate their phones in terms of supported resolutions. Smart phones and PDA phones are also gaining traction, as available chipset solutions are growing in capacity thanks to SiP and SoC technology. Decreasing component costs are also contributing to the proliferation of multifunction 2.5G models.

Touchscreens are integrated to improve the user interface. To enhance the mobility factor, suppliers are integrating Bluetooth or Wi-Fi. More companies will be releasing 2.5G phones with GPS and FM radios.
EDGE phones making inroads; GPRS strong
Dual-SIM card support, built-in devices proliferating
Competitively priced value-added models
OEM, ODM driving growth; own brands gaining traction
2.5G production facilities cluster in mainland China

	The DS03 from Taiwan's D-Net is a GSM dual-SIM card phone that supports GsM 900MHz and 1800MHz and GPRS.

Unirise Communication Co. Ltd will focus on EDGE phones with 3MP cameras and 3G phones that support TD-SCDMA and W-CDMA in 2008. This marks a shift from the company's Q3 2007 emphasis on GPRS phones with 2MP to 3MP cameras. Q1 2008 releases from Unirise will highlight Bluetooth, DVB-T, gaming and GPS.

Unirise Communication has two R&D centers in mainland China: one in Shenzhen, Guangdong province and another in Shanghai. Both centers have about 30 engineers each. The Shenzhen unit works on models that adopt MTK chipsets, and the Shanghai unit develops Infineon-based models.

BenQ Corp.'s R&D thrust this year centers on near field communication (NFC), DVB-H and assisted GPS (AGPS). The company cooperates with Taiwan's Ministry of Economic Affairs (MoEA) and telecom operators in developing daily-life user applications for its mobile phones. Its 2.5G phone models released in H2 2007 highlighted metallic housings, mirror faceplates and sporty designs, a reflection of the company's focus on new housing designs.

BenQ's T51 compact and slim phone supports GPRS, MMS and Java. It has a mirror faceplate and a 1.8in panel supporting 260,000 colors. The model has a 2MP camera, MP3 playback and FM radio. It supports Bluetooth advanced audio distribution profile (A2DP) profile, microSD slot and USB interface.

BenQ's T80 GSM smart phone supports NFC, Wi-Fi, Bluetooth and USB. The model has a 2MP built-in camera and runs on Windows Mobile 6.0. It has a Texas Instrument (TI) OMAP1030 260MHz processor, 64MB RAM and 256 MB ROM. The T80 has a 2.2in QVGA panel.

BenQ estimated its sales in 2007 totaled 300,000 mobile phones. The company released three 2.5G phones, with two 3G and multimedia phones also set for release.

GSM and GPRS phones positioned as camera or music phones were the focus of D-Net International Co. Ltd's R&D efforts in H2 2007. The company introduced up to five units during the period, with some models featuring 2MP cameras and dual-SIM card support. D-Net's DS503 is a GSM dual-SIM card phone that supports GSM 900MHz and 1800MHz and GPRS on simultaneous standby. The model has a 262,000-color 176x229 pixel 2.2in TFT display and a 1.3MP CMOS VGA camera. It supports MPEG-4 files and handwriting input.

Many Taiwan suppliers source chipsets from MTK, Infineon, Silicon, Skyworks, TI, NXP and Broadcom. Interviewed makers said that basic GPRS chipsets cost from $4 to $5 each in 2007. GPRS chipsets that support MP3, MP4, and 300,000 pixel cameras cost from $7 to $7.50 each; and GPRS chipsets that support MP3, MP4, and 1.3MP cameras are about $9 each.

End-2007 price estimates from TRI for Taiwan's low-end 2G/2.5G phones that support voice, message, WAP and GPRS range from $50 to $150 each. Midrange 2G/2.5G phones that support cameras, video recorders, push-to-talk (PTT), e-mail, PDA, MP3, and Wi-Fi are available from $100 to $350 per unit. The cost breakdown of a typical GPRS phone unit, based on TRI's study, is 27 percent memory, 24 percent DBB, 23 percent RF and IF, 10 percent discrete components, 8 percent ABB, 5 percent power management, and 3 percent audio codec.

	The CT-M83 from Hong Kong's Chi Tat is a dual-band phone that supports GPRS mobile station, handwriting input and dual SIM cards.

Multimedia entertainment is supported via MP3/MP4 playback, FM radio, built-in games and image/sound editing applications. High-end models may also support touchscreens, handwriting input, GPS and mobile TV receivers.

2.5G phones from JHG Enterprise Ltd feature dual-SIM card support. JHG offers six dual-SIM card mobile phones and 12 single-SIM models. Its KTX-M77 is a dual-SIM card mobile phone with dual 2MP cameras, 3in VGA display, handwriting input, stereo speakers, GPRS connection and Bluetooth. It supports flash memory expansion, PC synchronization and MP3/MP4 playback.

Chi Tat Electronics Co. Ltd, which has developed about 100 ODM mobile phone models and three models under its own brand, is currently promoting the CT-M83 and CT-M88.

The CT-M83 is a dual-band EGSM 900MHz and 1800MHz mobile phone with dual-SIM card support. It has a 2.6in QVGA display with touchscreen, 1.3MP camera with IR and video recorder, built-in games, alarm clock, calendar, calculator, world time, unit conversion and optional Bluetooth. It supports GPRS mobile station, music playback and microSD. It is powered by a 1500mAh battery.

Chi Tat's CT-M88 GSM/CDMA mobile phone features a 2.6in QVGA screen with 65,000 colors. It supports music playback, microSD memory expansion and 66 melody polyphonic ring tones. It comes with a 1.3MP camera for still image capture and video recording, and supports touchscreen and handwriting input. Its 1400mAh battery is good for 200hr standby time and 3hr talk time. Alarm clock, calendar, calculator, world time, unit conversion and games are also incorporated.

PDA phones and GPS phones running on Windows Mobile and Smart NX OS are on offer from TSD Mobile Ltd, which carries more than 100 phone models ranging from low-end to high-end 2.75G, Wi-Fi-enabled phones. The company's dual-SIM card phones are available in GSM+GSM and GSM+CDMA versions.

The company offers the TC002, which runs on Smart NX and comes with Bluetooth, e-book, camera, touchscreen and QWERTY keypad.

TSD's T9023 features handwriting input, MP3/MP4 playback and high-definition camera. It supports WAP browsing with GPRS connection, digital voice recording, English-Chinese dictionary, calculator and alarm.

Many suppliers plan to release models with built-in mobile TV receivers in early 2008 in anticipation of strong demand leading to the Olympic Games in mainland China. JHG has announced its TV mobile phone, the K-2008. It has a 3in touchscreen display, Bluetooth, built-in games, FM radio, digital camera and MP3/MP4 player. Its OS supports up to 10 languages. Chi Tat plans to release a mobile phone with TV recording function in early 2008.

Entry-level phone models from Hong Kong are priced from $25 to $40 each. Most 2.5G phones are in the $60 to $130 range, while high-end PDA phones are from $140 to $200. As the market becomes saturated with fullfeatured models, midrange and high-end phones will likely experience a 10 to 20 percent price reduction by H2 2008.

	The NT1-160 from Novol of mainland China is a dual-SIM card GSM phone with a 2.6in screen, A/V playback and 1.3Mp camera.

Midrange products, available from $70 to $100 per unit, usually integrate 2MP CMOS cameras, 1.8in to 2.6in TFT-LCD screens, MP3 players, voice recorders, speakerphones, dual-SIM card support and Bluetooth connectivity. Dual-mode phones with midrange features are priced higher at about $150 each.

Most popular features and functions are embedded in high-end models. These include TFT-LCD screens larger than 2.6in, and possibly with touchscreen function. Also included are Windows Mobile OS, media players, 3MP CMOS cameras for stills and videos, Bluetooth, GPS, e-mail, polyphonic tones and flash memory card expansion. These high-end models are available from $150 to below $200 each.

The M958 Class 12 GPRS phone from Hedy Holding Co. Ltd features a 2.8in QVGA touchscreen, 3.2MP camera and dual-SIM card support. It supports A/V playback, e-mail, e-book, Bluetooth, FM radio and Java 2.0.

The GM80 from Dongguan Fuyai Digital Technology Ltd also features a 2.8in touchscreen. The device has a 2MP CMOS camera, multiple-format A/V player, Bluetooth, GPRS, name card recognition, flash memory card expansion, and Microsoft Office document and PDF viewer.

Fuyai has developed 2.5G phones with GPS function and Windows Mobile platform. Fuyai's solutions for 2.5G phones are from Infineon and NXP. In 2008, the company's R&D roadmap includes adding Wi-Fi support to its models.

Fuyai's product development team designs the hardware themselves. The company highlights this in-house design capability as an edge over its competitors on the mainland. It will promote more aggressively its low-end and midrange products in 2008, at the same time launch more high-end mobile phones with touchscreen LCDs, GPS and Wi-Fi.

Shenzhen Novol Digital Co. Ltd's NT1-160 GSM phone features a 2.6in touchscreen QVGA TFT display, MP3/ MP4 playback, 1.3MP camera, handwriting recognition, e-book and auto scrolling. Novol produces GSM and GPRS mobile phones. It is developing GPS phones and a model with a built-in telescope.

The DZ-GL005, one of the popular low-end 2.5G phones from Dazec Electronic Co. Ltd, is a GPRS model that can support GSM 900MHz and 1800MHz or 850MHz and 1900MHz. It has a 1.8in CSTN LCD, 1.3MP CMOS camera and 16MB built-in memory. It supports MP3/MP4 playback and uses an Infineon chipset solution.

Many 2.5G mobile phone makers on the mainland have been engaged in GPS mobile phone R&D and plan to launch these models in H1 2008. Many makers are also pursuing product development initiatives emphasizing Wi-Fi, RFID and dual-mode functions. Housing design is another focal area of product development.

Built-in camera resolution is projected by makers to move to the 3MP to 5MP range. Touchscreen panels, along with other features that used to remain in the domain of high-end and midrange models, can also be expected to be available in more low-end models. This trend of increasing value added in entry-level models will continue as component costs decline, and more popular functions continue to be integrated into SiP or SoC solutions. Some companies such as Novol forecast a 5 to 10 percent decrease in FOB prices for 2.5G phones in 2008.

Although ODM and OEM business continues to generate the bulk of sales for Taiwan makers, some of these companies' own brands are starting to secure a following in the global market. Among these Taiwan mobile phone suppliers building their own brands are HTC, AsusTek, BenQ, E-Ten, Inventec and Mitac.

The key markets of Taiwan-based 2.5G phone makers are Europe, North America and mainland China. Unirise disclosed that Europe absorbs 30 percent of its offshore shipments, and mainland China, 58 percent. In 2008, the company's international marketing efforts will be on developing business in South America, particularly in Brazil. Unirise offers ODM mobile phones.

Among Hong Kong makers, emerging markets such as India, the Middle East, Africa, Eastern Europe and South America account for the bulk of entry-level models. Most midrange and high-end models ship to Western Europe and other Asian regions.

With the latest models offering similar or better functions than the leading international brands but at much lower prices, Hong Kong suppliers are optimistic of eventually grabbing a larger share in the major markets of Western Europe and North America.

Before foraying into mobile phone manufacturing, Hong Kong's Chi Tat has been a major exporter of caller ID phones to the Middle East. It has recently begun to boost its overseas business, after focusing on the mainland China market the past few years. Its initial target markets are India and the Middle East, although it is also looking to penetrate Europe, South America and other markets.

JHG's mobile phones are shipped to Western Europe and Asia. It accepts a minimum order of 500 units.

For mainland 2.5G mobile phone makers, the main export destinations are Southeast Asia, Africa, South America and South Asia, particularly India and Vietnam. Most exports to these regions are under OEM or ODM terms.

Makers agree that there is much room for growth in developing international awareness for mainland China brands. Nonetheless, leading makers Huawei Technologies Co. Ltd and ZTE Corp. are making inroads, particularly in the 3G category.

Increasing certification and testing costs, which are required for exports to the EU and North America, are a cause of concern for most mainland China makers. Interviewed companies say that the added costs increase the pressure on makers whose main competitive advantage lies on low FOB prices.

	The KTX-M77 from JHG of Hong Kong supports GPRS wireless Internet connection and PC synchronization.

The mature supply chain in mainland China has minimized, if not eradicated, the probability of component supply shortage. The boom in the mobile phone design industry in recent years has also accelerated innovation and product development.

Many Taiwan 2.5G phone suppliers have factories in Taiwan and mainland China. Many of the suppliers produce new and high-end models in Taiwan and handle mass production in their mainland China facilities.

For example, D-Net's factories are located in Taipei, Taiwan and Shenzhen, Guangdong. D-Net conducts SMT, plastic injection molding, assembly and packaging in-house.

Calcomp moved its Taipei R&D center to Suzhou, in mainland China's Jiangsu province. The company said the transfer has enabled it to shorten production time. Calcomp has a monthly capacity of 2.4 million mobile phones. Its annual production in 2007 was estimated at 12 million units.

Unirise focused on 2.5G GPRS phones in 2007. Unirise makes the PCB assemblies of its mobile phones at its facility in Shenzhen. Assembly is conducted in its Dongguan facility, which has two assembly lines with a monthly capacity of 150,000 units. The company had an average output of 100,000 units monthly in 2007.

Most Hong Kong suppliers of 2.5G phones, which include major consumer electronics companies such as Skyworth Group, Malata and Chi Tat , and telecom product specialists such as JHG and TSD, conduct production on the mainland.

Chi Tat's industrial complex in Shenzhen covers a 25000sqm area and employs about 3,500 workers. It has a bonding department, two SMT lines, and 13 automated production lines with a production capacity of 30,000 mobile phones monthly.

The company develops more than 30 new products every year. It has obtained patents in mainland China for some of its innovations.

Most of Chi Tat's mobile phones adopt MTK and Infineon solutions.

TSD has a 40000sqm factory in Shenzhen with a monthly production capacity of 200,000 units. Running almost at full capacity, the factory is undergoing expansion and upon completion will have a total floor area of 90000sqm. More than 1,000 workers are employed in the factory.

TSD renders software, hardware and structural design services with its 100-strong technical staff. Its mobile phones can support 2G, 2.5G and 2.75G platforms, with 3G development underway. TSD sources key ICs and front-end modules from MTK and Skyworks Solutions Inc.

JHG's factory in Shenzhen is devoted to manufacturing telecom products, including mobile phones, caller ID boxes, USB VoIP phones and caller ID phones. It can turn out 5,000 mobile phones per month.

Fuyai of mainland China, which entered the 2.5G phone industry in 2006, has a factory in Dongguan. The company projects a fast-growth phase for its mobile phone products in 2008, with a projected monthly output of 200,000 units.

Fuyai conducts SMT, PCB assembly, subassembly, testing and packaging in-house. To comply with the RoHS directive, the company has installed an XRF machine to analyze incoming materials.

Novol has a monthly capacity of 250,000 2.5G phones. Novol conducts SMT, assembly, testing and packaging in-house, while it outsources mold making. Its chipset supplier is MTK.

Mainland-based 2.5G mobile phone makers mostly adopt chipsets from from MTK, TI, Spectrum, Freescale, NXP and Infineon.