Turnaround finally in global mobile phone market?

Late this week, there were three reports on the global mobile phone market!

First, IDC, which says that the mobile phone market had turned a corner in Q3, and more gains are likely in Q4-2009.

Then, ABI Research pointed out that the outlook for mobile phones continue to improve — with 291.1 million mobile handsets shipped in Q3-2009 — a contraction of 6.5 percent.

Finally, Strategy Analytics also reported that global mobile handset shipments fell 4 percent year-over-year, to reach 291 million units in Q3 2009.

One other interesting aspect — while the top five vendors — Nokia, Samsung, LG, Sony Ericsson and Motorola — either held on or lost a small amount of their market share, Apple has increased its share to 2.5 percent — a figure common with both ABI Research and Strategy Analytics.

Well, all of this can only be good news for the global technology industry as well as the global mobile phone market — both of whom have had to face the wrath of probably the longest ever recession! Perhaps, it is also a good news for the mobile phone semiconductor market as well!

India unlikely to become LCD TV manufacturing hub

A recent iSuppli report, dwelt on the fact that the hard economic times could actually turn out to be a boon for contract manufacturers serving the LCD-TV market. The reason given was that the leading brand names of the world are increasingly outsourcing their production to reduce risk.

This invariably leads to the China factor, and whether China is dominating when iSuppli speaks about outsourcing to EMS and ODM companies.

Again, I would like to thank Jonathan Cassell, Editorial Director and Manager, Public Relations, iSuppli, for helping me out a lot with my queries! Many thanks.

Responding to my query, Jeffrey Wu, senior analyst, EMS/ODM, for iSuppli Corp., El Segundo, Calif., USA, says that the China factor consists of a few critical elements, such as cheap labor, localized supply chains, manufacturing clusters, government-planned trade zones, etc.

China backlash observed
Wu adds: “In recent years, however, owing to: (a) rising labor costs (due to economic growth and the new labor laws in place), (b) increasing raw material costs (due to the price hike in crude oil), and (c) surging shipping and logistics costs (due to oil price increase), iSuppli has observed backlash in China.

“Nowadays, OEMs, EMS providers and ODMs factor in more considerations, besides the China factor, when calculating their total landed costs. For products that involve substantial tariffs (e.g. LCD TVs and mobile phones in India) and high shipping costs (industrial products such as factory automation equipment), companies tend to look beyond the China factor and set up manufacturing presences close to the end markets.

“For example, more and more companies establish new production plants in Eastern Europe to fulfill the demand in Western Europe and in India to support the demand in Southeast Asia, etc.”

It is quite well known that the so-called hard economic times may not apply to China and India. How does iSuppli forsee LCD-TV manufacturing getting outsourced to places such as India?

India unlikely to become LCD TV manufacturing hub
Wu further adds: “Localized LCD TV production involves a few critical elements, including a sizable end market, high tariffs, supply chain readiness (especially panel supply and LCD module assembly) besides other factors.

“While localized LCD TV manufacturing in India is on the rise, the activities are limited to only final assembly India for the time being such that OEMs eschew tariffs. In other words, while the demand for LCD TVs in India has been growing, it is not high enough to justify localized LCD panel and module assembly for most panel suppliers, EMS providers and OEMs.”

In short, iSuppli believes that more and more LCD TV production-related activities are taking place in India but India may not become the next LCD TV manufacturing hub in the near future.

Some leading Korean and Japanese makers have already been present in India for some time, and have been going very strong, especially, LG, Panasonic and Samsung. Would they be required to rethink on their outsourcing strategies as well?

Overall outsourcing strategies
According to Wu, Japanese and Koreans traditionally like to maintain their production in-house for they see manufacturing as one of their core competences.

“Specific to the Indian market, these companies ship in CKD or SKD parts into India and administer the final assembly in India. As of right now, their strong performances in the India market do not affect their overall outsourcing strategies.

“However, as these OEMs, especially Korean OEMs, begin to strategize their approach to outsourcing on a global level, their operations in India may be affected in the future. For instance, they may outsource finally assembly activities to their would-be EMS partners in the future,” he concludes.