El Segundo, Calif. - After suffering the typical seasonal slowdown in the first three months of the year, mobile-phone unit production will rise sequentially in the second quarter and for the remainder of 2005, according to the market research firm, iSuppli Corp.
Mobile-phone production in the first quarter of 2005 amounted to 173 million units, down 13 percent from 200 million in the fourth quarter of 2004. However, production in the first quarter was up 2.4 percent compared to 169.5 million in the first quarter of 2004.
The second quarter is shaping to be better than the first, with production of 180.5 million mobile phones, up 4 percent from the first quarter, and up 7.1 percent from a year earlier. Shipments will rise 5.3 percent sequentially in the third quarter to 190 million and 8.4 percent in the fourth quarter to 206 million.
After rising 25 percent in 2004, mobile-phone unit production growth will taper off this year. Production will rise to 750 million units in 2005, up about 5 percent from 713 million in 2004.
While growth is decelerating this year, a shipment level of more than 700 million units is vast-no matter what the product. With such a huge quantity, the law of large numbers begins to take effect, and a major growth margin becomes difficult or impossible to achieve.
Mobile-phone production growth is driven by purchases by new subscribers and by buying of replacement handsets. Although some regions of the world are becoming saturated, developing nations such as China and India will continue to see strong subscriber growth.
Even with subscriber growth, mobile-phone shipments this year and in subsequent years increasingly will be driven by replacement or upgrade sales.
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