TAIPEI, Taiwan Taiwan firms will ship about 123 million cell phones this year, accounting for 12 percent of a global market expected to reach about 1 billion units.
In 2006, Gartner Dataquest expects cell phone shipments to increase 21 percent. Despite that steady growth, however, Taiwan contract designers are feeling a pinch on the top and bottom lines.
Because ODMs here are focusing on cheaper, entry level models, their average selling prices in the third quarter dipped 8.6 percent, according to the Market Intelligence Center (MIC), a government-sponsored market researcher.
In a recent report, the MIC said the dominance of Taiwan's ODM makers in low-end phones made by Motorola and Sony Ericsson will begin to erode next year, as new ultra low cost models like the Motofone, designed in-house by Motorola, are farmed out to cheaper EMS players.
"Changes in major brands' outsourcing strategies for value-line products and competition from EMS providers might affect shipment growth of Taiwanese ODM makers in 2007.
Unable to receive orders from first-tier brands, second-tier ODM makers will have even more difficulty surviving the competition in 2007, prompting them to shift their resources to PDA and Smartphone R&D and to telecom carriers' private-label market," the report said.
MIC said the 3G era will increase demand from global brands for customized models, which could be an opportunity for Taiwan's ODM firms.