Huawei aims to double phone sales to challenge ZTE's top spot

PUBLISHED : Saturday, 03 May, 2008, 12:00am
UPDATED : Saturday, 03 May, 2008, 12:00am


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Huawei Technologies, one of the mainland's leading telecommunications equipment vendors, plans to double its mobile-telephone sales this year to challenge ZTE Corp as the country's largest telephone maker.

The Shenzhen-based company has set a sales target of 50 million mobile telephones and data cards this year, up from about 20 million last year, according to industry sources.

Huawei hopes to overtake ZTE as the world's sixth-largest mobile-telephone maker this year. ZTE sold 31 million terminals (handsets and data cards) last year and plans to boost shipments to 50 million this year.

Sources also said that Huawei was expected to outsource some of its telephone manufacturing orders to Foxconn International Holdings, controlled by Taiwan's Hon Hai Precision.

Huawei's telephones are now made by Cal-Comp Electronics in Thailand, and Flextronics. 'In order to strengthen relations with Hon Hai, Huawei could migrate the majority of its mobile-telephone orders to Foxconn,' an industry source said, adding that the tie-up would take effect in the near future.

Huawei has outsourced its equipment manufacturing process to Hon Hai. It could be a natural move to place orders with Foxconn for its telephone business.

'Huawei is expanding its equipment market share in Europe and Asia,' said BNP Paribas analyst Frederick Wong. 'It can provide end-to-end solutions to mobile operators with both base stations and phones.'

Mr Wong said Huawei's expansion into the telephone business was due to changes in the business models of mobile operators in Europe.

'Europe's leading mobile operators now have released the mobile-phone and network optimisation contracts to equipment vendors, rather than doing the optimisation themselves,' he said.

'Such a move benefits Huawei as it has the knowhow to do this. The company can also provide customised phones to operators for data services.'

Huawei is now partnering with various mobile operators around the world, including Britain's Vodafone Group, Hutchison Telecom in Europe and SmarTone Vodafone in Hong Kong.

'Mobile operators are looking for tailor-made handsets for their own services, which can help differentiate them from other competitors,' said Mr Wong.

Huawei would like to follow the business model that ZTE has pursued in the past few years by selling customised handsets and data cards to companies.

'ZTE sold about 23 million handsets and terminals to mobile operators last year, while the remaining were mainly own-brand products in China,' said Mr Wong.

Ramping up

The firm's sales target for mobile telephones and data cards this year: 50m