Worldwide trends emphasizing digital technology and expanded applications are sustaining Greater China's cordless phone industry despite the steady decline in demand for fixed line phones. The shrinking supplier population — more than 50 makers from over 100 suppliers in early 2005 — is staying afloat by shifting to digital from analog, and to high frequencies from low frequencies. These R&D and production shifts, projected in the Cordless Phones: Supplier capability in mainland China, Taiwan and Hong Kong, published in January 2005, have driven the growth of 2.4GHz and DECT cordless phones.
Despite the drop in the number of active makers in mainland China, which now has nearly 30 cordless phone makers, it is still one of the top three largest cordless phone manufacturing bases worldwide. Many mainland China makers have moved to 2.4GHz production, although some continue to maintain a small volume of 46/49MHz cordless phones.
Taiwan has about 10 suppliers of cordless phones, mostly focusing on 2.4GHz and DECT technologies. Hong Kong suppliers are moving from 2.4GHz cordless phones to DECT phones.
The other key findings of this report are:
• 2.4GHz cordless phones have entered the mainstream, displacing 46/49MHz models. Makers maintain a small volume of the latter for developing markets.
• The DECT phone sector flourished in 2005 and will continue expanding, driven by increasing demand for high frequency and high-security cordless phones.
• Supply of long-range and 5.8GHz cordless phones will decline due to low demand.
• Amid moderate output and export expansion plans, makers are looking to add value to their products by integrating VoIP and wireless capabilities.
• To match worldwide mobile phone trends, new models feature SMS, MMS and compact, lightweight handsets that look like mobile phones.
• Prices are projected to remain steady, with potential increases resulting from a spike in production costs brought about by RoHS compliance.
• Production costs are expected to rise by 5 percent.
This report covers 29 companies across Greater China: 20 from mainland China, 6 based in Taiwan and 3 from Hong Kong. Most of the companies are small, but altogether they represent at least 60 percent of Greater China's supplier base of cordless phones. All of them are export-oriented, private companies. Several of them are pioneer and leading makers in the different cordless phone product categories.
Industry Overview
Greater China's cordless phone industry is quickening the pace of transition from analog to digital and from low-frequency to high-frequency phones. These shifts in direction are brought about by makers' response to worldwide trends emphasizing digital technology and expanded applications. They are also driven by the need to boost the market's competitiveness and counteract the growing rate of fixed-to-mobile substitution (FMS), which has been eating into landline phone sales in favor of the mobile phone.
The shift from analog to digital has been going on for years across Greater China. However, analog models continue to dominate some segments, particularly low-end low-frequency lines. This is sustained on the one hand by huge domestic demand and on the other by strong demand in developing markets and regions. The high technology threshold also keeps some companies from moving to digital.
Many makers, however, plan to commence digital cordless phone production in the coming months. Those who have been developing digital phones plan to increase their production volume.
The 46/49MHz line has been shrinking as many makers leave to develop high-frequency models such as 2.4GHz, 5.8GHz or DECT. Although several makers remain steadfast in pursuing low-frequency cordless phones to meet demand in some regions, supply will continue to decline in 2006. The increasingly tight competition in the domestic market has also resulted in a market shakeout that forced some companies out of the line altogether or into other cordless phone product types.
In the 2.4GHz line, the overcrowding of frequency exposed problems stemming from interference. Many makers are now challenged to improve their products' anti-interference and data security capabilities. However, the line remains buoyant, with both demand and supply growing steadily.
As projected in the Cordless Phones: Supplier capability in mainland China, Taiwan and Hong Kong published in January 2005, the DECT phone sector flourished in 2005. The line is expected to continue on this uptrend, driven by increasing demand for high-frequency and high-security cordless phones.
In 2005, the long-range cordless phone market did not take off. Supply rose in 2005, but sluggish demand inhibited growth, and many makers started revisiting their business models in early 2006. Companies that reduced their 46/49MHz output to pursue long range and super long-range cordless phones in 2005 are now reducing their investments in the latter.
Industry Composition
Declining demand, mature technology and tightening competition are some of the factors that have constricted Greater China's cordless phone supplier base. Most of the companies that have dropped out of the line are small-scale companies with limited R&D capability. There are at present more than 50 suppliers in mainland China, Taiwan and Hong Kong, half the size of the supplier base in 2005.
This report covers 29 companies across Greater China: 20 from mainland China, 6 based in Taiwan and 3 from Hong Kong. Most of the companies are small, but combined they represent at least 60 percent of Greater China's supplier base for cordless phones. Most of the companies covered registered between US$1 million and US$15 million in annual sales of cordless phones in 2005. Almost all of them are private enterprises and are heavily export-oriented. Several of them are pioneer and leading makers in the different cordless phone product categories.
Supplier Profile
Advance Wireless Technology Corp.
Advance Wireless Technology Corp. (Awtek) is an R&D-centric company that specializes in wireless communication and networking products. The company started cordless phone manufacture in 2000.
Aside from providing DECT phones, DECT RF modules and DECT headsets, Awtek can also manufacture products supporting Bluetooth and GSM technologies. The company also makes wireless PBXs, home gateways and VoIP products. It has technical partnership with Winfinity of Germany, and has invested some of its revenue in Winfinity Asia Technology in Taiwan.
Awtek's main business covers development contracts, turnkey solutions, product promotions and certification supports.
It recorded an annual sales of US$2 million from all its products in 2005, with US$1.5 million coming from exports. Awtek estimates sales of all products will reach US$9 million in 2006, with exports amounting to US$7.5 million.
The sales growth is estimated at 350 percent, and the export growth at 400 percent.
The company does OEM and ODM businesses. Its overseas customers include Xingtel, TopCom and Saiet. Its OEM cordless phones are for Taiwan cordless phone suppliers, such as Netvox, Rexon and Senao.
In 2005, Awtek generated 75 percent of its cordless phone sales from exports. Western Europe took up 60 percent of the export market share. Central and South America absorbed 20 percent of exports, North America 10 percent, and the rest went to other regions.
The company shipped more than 50,000 units of cordless phones in 2005. Shipments generated US$1.2 million.
Awtek expects export to reach 70,000 units this year, an annual growth of 40 percent. Hence, it expects cordless phone exports to hit US$3.8 million in 2006, a 217 percent rise from 2005.
Manufacturing Capability
Awtek owns a factory in Taichung, Taiwan. The 660sqm factory has a production line that handles a part of the assembly and testing processes. The production line can generate 10,000 units of cordless phones a month.
All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.
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