Sept 10, 2001

The world market slump in the mobile phone market, caused by careless exterpolation of growth rates by major European and American brands, did not have impact on Taiwan in its first stage, as reducing productions and shutting down lines resulted in outsourcing orders to Taiwan. However, that has changed according to local reports.

Taiwan's leading mobile-phone makers including Quanta Computer Inc., Inventec Corp., Arima Computer Corp., and Compal Electronics Inc., have lowered shipment forecasts for 2001 by at least 50 percent as a result of weak demand. Inventec has lowered its shipment goal to 200,000 handsets, down from the original plan of 500,000. Quanta has reduced its goal to 1.5 million phones from 3 million phones, while Arima has lowered its goal to 2 million phones after earlier revising downward a forecast of 10 million phones to 5 million. Arima attributed the downturn to the delay of Ericsson's approval on its software and protocol. Ericsson has contracted Arima to produce phones.

Although Compal has secured orders from Motorola Inc., and its phones built on Global System for Mobile Communications (GSM) and Code Division Multiple Access (CDMA) technologies have acquired orders from China, its year-earlier forecast of 4 million phones have proven to be wildly optimistic.

Lacking contracts from big-name firms in the first half, Quanta and Inventec could only count on their own-brand products. In the second half, outsourcing orders from Siemens AG of Germany are forecast to give Quanta a boost to hold up its forecast from falling below 1.5 million phones (from 3 million).

Early this year, Inventec issued an optimistic forecast, predicting its shipments would top 500,000 phones this year on the assumption that major brand-name firms would place orders. However, these assumptions have so far failed to materialize, although the company is in discussions with Siemens and Sagem of France over contract production for their smart phones.

Acer Communications & Multimedia Inc., the telecom-technology unit of the Acer Group, has revised its goal for this year downward to 6 million phones from an original forecast of 15 million units. But it is confident that actual shipments can reach 7 million phones as it has recently secured orders from Motorola.

GVC Corp. is confident that its shipments will meet its goal of 2 million phones, although it delivered only 800,000 phones in the first half. Its optimistic estimate is based on the outsourcing contracts for General Packet Radio Service-based (GPRS-based) phones from Ericsson in the second half and from LG of Korea.