Rumor: China Mobile Overstocks TD-SCDMA Feature Phones
Southern Metropolitan News, 8/29/12
China Mobile (NYSE: CHL; 0941.HK) has prohibited third-tier and fourth-tier city branches from procuring TD-SCDMA feature phones for at least a month, according to a source within the operator, due to overstock concerns. Meanwhile, many vendors have ceased producing TD-SCDMA feature phones having switched over to smartphones.
China shipped 67 mln smartphones in 2011, according to market research firm IHS iSuppli, with shipments expected to grow 139% YoY to 160 mln units in 2012.
Feature phone sales dropped substantially after the release of low-cost smartphone solutions by Qualcomm and MediaTek at the start of 2012 reduced smartphone prices. According to an industry source, numerous smaller handset vendors have shut down due to insufficient cash flow. For the past decade, China's handset industry has relied on a delivery-first, payment-later model (with the exception of a few vendors large and reputable enough to command payment up front for handset orders), which created cash flow problems for smaller brands.
According to another industry source, Chinese handset vendor Gionee cleared hundreds of millions of Chinese yuan in feature phone inventory over four months in H1 2012, while BBK Electronics and OPPO have large inventories that will take time to clear out, but these firms have sufficient cash reserves to support smartphone R&D and manufacturing while reducing their feature phone stocks.
Keywords: national statistics market size growth rate China Mobile feature phone handset vendor handset smartphone procurement wireless Qualcomm Gionee MediaTek Oppo CHL TD-SCDMA 0941.HK BBK 3G handset chip 3rd tier 4th tier
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