01.29.2001
Ericsson closes handset-manufacturing division

• Following Motorola (U.S.)’s move to close its biggest handset-manufacturing factory in Harvard (U.S.) on Jan 18 2001, Ericsson (U.S.), the world third biggest mobile phone maker, has announced that it will close its handset manufacturing division to cut costs & maintain competitiveness.

• Outsourcing contracts for medium-low end handsets will be given to GVC Corp. (2322 'Zhi Fu') and Hua Guan, a subsidiary of Arima Computer Corp (2381 'Hua Yu').

• GVC Corp. expects production of handsets to jump from 900k unit in 2000 to 2m in 2001.

• This is excellent news for the handset manufacturing industry in Taiwan. We expect more outsourcing contracts to be granted to Taiwan manufacturers since they have extensive experience and an established reputation in the electronic and computer product-manufacturing field.

• We remain concerned about handset manufacturing profit margins. Whilst margins are at a current level of around 10%, we expect further reductions as competition increases.

• Major Taiwan handset makers are Compal (2324 ‘Ren Bao’), GVC (2322 ‘Zhi Fu’), Acer Peripherals (2352 ‘Ming Ji) & DbTel (5304 ‘Da Ba’).

BennyLo@Primasia.com +886-[0]2-2547-8869