Handset makers will have their profit margins squeezed as competition heats up in the mainland market, according to Salomon Smith Barney.
The United States brokerage said capacity expansion among domestic and international manufacturers would add to the risk of oversupply in China, one of the few bright spots in the global telecommunications market last year.
It forecast domestic supply of 119.9 million handsets this year, only 3.6 million below projected demand of 123.4 million.
For last year, Salomon forecast a handset shortage of 24.1 million, with projected supply of 86.1 million and demand of 110.2 million.
'This year is the turning point,' said Salomon head of China research Lan Xue. 'We foresee competition heating up - who will be the ultimate winner will depend on their management style and products.'
Analysts and industry players widely expect a handset glut this year, but are divided as to the extent.
