China Mobile's 4G expansion drives smartphone supply buildup in China
Phone makers and chip providers rush to keep up with network schedule
With a massive 4G network expansion under way on the mainland, the market's leading smartphone suppliers and their mobile chip providers are in a rush to keep pace with the rapid deployment in hundreds of cities.
Analysts see the 4G network roll-out being led by China Mobile, the world's largest wireless network operator, changing the competitive landscape for smartphones in the domestic market, where most of the country's 1.23 billion subscribers at the end of December were still tied to old 2G cellular infrastructure.
While Apple recently hogged the headlines by having China Mobile as a new carrier-partner for the iPhone, the domestic brands led by Lenovo, Huawei Technologies, ZTE and Coolpad were expected to step up their supply of cheaper smartphones to help the operator sign up more 4G subscribers nationwide, analysts said.
China Mobile, which had 767.206 million subscribers at the end of December, has targeted shipments of about 100 million 4G smartphones this year, including many models at the 1,000 yuan (HK$1,280) price mark.
If all those devices are connected to the operator's new high-speed mobile network, that would represent about 13 per cent 4G adoption within 12 months of launch, according to a report by Bernstein Research.
Ricky Lai, a research analyst at Guotai Junan Securities, said domestic manufacturers that had been producing mostly 3G smartphones aimed to boost their production of low-end 4G smartphones. These include TCL Communications, Xiaomi and Haier Electronics.
Analysts consider Hong Kong-listed Coolpad, formerly known as China Wireless Technologies, to be the most aggressive among the Chinese smartphone makers. The firm plans to ship more than 30 million 4G devices this year and was the first to announce a 1,000 yuan model last month.
Mark Li, a senior analyst at Bernstein and its report's lead author, said there was "solid chipset availability" to smartphone manufacturers as these providers had kept up with China Mobile's ambitious roll-out schedule.
The operator has encouraged a broader base of 4G chipset suppliers to enable production of more low-cost models. It expects more than 200 models to be available this year on its network, which is based on the mainland-developed 4G standard called time division long-term evolution (TD-LTE).
The primary 4G chipset suppliers include Qualcomm, MediaTek in Taiwan, Huawei subsidiary HiSilicon and Marvell Technology. Newer providers include ZTE, Spreadtrum Communications, LeadCore Technology, Intel and Broadcom.
Technology research firm IDC has forecast combined 3G and 4G smartphone shipments on the mainland to exceed 450 million units this year.
China Mobile last month became the country's first operator to launch a commercial 4G network. The company aims to establish 500,000 TD-LTE base stations by the end of this year to gain 4G coverage in 340 cities across the mainland.