Borrowed from Ted on the AMD thread:
Konka Teams With Intel to Manufacture Mobile Phones
Shenzhen, Oct. 16 (Bloomberg) -- Konka Group Co., China's second-largest television maker, has teamed up with world No. 1 chipmaker Intel Corp. to manufacture the latest in wireless phone technology for the Chinese market, expanding its shift to telecommunications from the unprofitable television industry.
Konka, whose earnings growth slowed to 13 percent last year from 23 percent in 1998, signed an agreement with Intel to develop chips for so-called third generation mobile phones, said He Jianjun, a Konka spokesman. He declined to discuss the financial terms of the pact.
``We don't want to expand in televisions but in mobile phones in the future,'' He said. ``Mobile phone making has a 30 percent profit margin, while televisions have 20 percent.''
Konka is not alone in shifting to more profitable business lines. Years of stubborn stockpiles, sagging consumer demand and profit-busting price wars are driving major Chinese appliance makers into telecommunications and Internet-related industries.
Nanjing Panda Electronics Co., a rival television maker, last week said it will sell its unprofitable television businesses to its parent to focus on telecommunications units.
Market Growth
China's mobile-phone market is expected to grow to 60 million users by the end of this year, up from 43 million in 1999. Some 18 million new mobile phones worth up to 45 billion yuan ($5.4 billion) were sold last year, according to data provided by the Ministry of Information Industry, the nation's telecommunications regulator.
Konka expects its mobile phone sales to account for half of total revenue in about five years, He said. By contrast, televisions accounted for 95 percent of last year's 10 billion yuan in sales.
The company, based in the southern city of Shenzhen, started manufacturing its own brand of mobile phones earlier this year. It plans to sell 1 million units this year, He said.
At the same time, the company's television expects television sales to be little changed this year at 6 million units.
Konka's B shares, which foreigners can own, rose 2.5 percent to HK$4.51 in Shenzhen trading today.
Oct/16/2000 1:42 ET
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