ODM handset makers hit snags in smartphone segment

Plans by Taiwan-based ODM handset makers, notably Compal Communications and Arima Communications, to make substantial inroads into the smartphone segment appear to have become stuck, as the companies face dwindling orders, according to sources at Taiwan handset makers.

Orders for ODM smartphones have been reduced to a great extend recently due to sagging performance of smartphone models from the leading IT vendors such as Hewlett-Packard (HP) and Palm as well as those from smaller handset vendors, including i-mate and MWG (former O2 Asia Pacific), the sources noted.

In addition, keen competition from EMS (electronics manufacturing service) companies such as Foxconn Electronics (Hon Hai Precision Industry) and Flextronics International has also undermined ODM handset makers' efforts to win orders from the leading handset vendors, add the sources.

Compal originally planned to boost the smartphone and 3G segments to 25% of its total revenues in 2008. However, the ratio could just be in a single-digit rate this year, estimated the sources.

Arima was hoping smartphone revenues would contribute about 50% to its total revenues before 2009 - a projection now looking unlikely in the near future, the sources contended.

On the other hand, Taiwan-based branded smartphone vendors, including High Tech Computer (HTC), Asustek Computer, Gigabyte Communications and E-Ten Information Systems, have fared much better than those ODM makers, thanks to their cooperation with the retail channel or telecom services providers.

Taiwan-based branded smartphones vendors could become mainstream suppliers in the global smartphone market n the future, the sources asserted.

source

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