China Unicom (NYSE: CHU; 0762.HK; 600050.SH) has reportedly ordered approximately 2 mln operator-customized smartphones from Beijing-based Android handset developer Xiaomi. China Unicom and Xiaomi will officially announce the specifics of the deal in a Beijing press conference on December 20, according to an industry source.
The smartphones will be available through China Unicom sales channels as early as before the Chinese New Year holiday (Jan 22-28); although Xiaomi currently has insufficient stock, it has increased production capacity and will have 80,000 to 100,000 units ready by that time, followed by additional units after the holiday. China Unicom will market the Xiaomi handset the same way it did the iPhone 4, offering handset subsidies as high as 56% of the price of the phone.
Xiaomi is likely to change contract manufacturers following the deal, according to another industry insider, most likely switching to Taiwanese electronics manufacturer Foxconn (2038.HK; 2354.TW), with which it has had extensive contact.