The following e-mail was sent to me today by a person with whom I don't remember having previous contact.
--Mike Buckley
Mike,
Since I am not a registered member in SiliconInvestor, I can not post. However, I have been reading the G&K thread for more than a year and a half already.
After reading some of the comments about the Chinese market today, I feel that I may provide some of my personal feeling and experience about this issue (the market potential for QCOM especially because the interest we all
have in the stock).
So I am writing to as you to post the following mesage if you think it is worthsome.
I came from China more than 15 years ago to study. I still visit China every year in recent years (to teach some short courses or give technical seminars in some Chinese universities).
In 1980's, phones were mainly for big companies and government offices. The first time I have ever used a telephone was in 1982 after I graduated from
college.
In 1986, I went back to see my wife, I tried to call my wife from Beijing. I had to go to the Office of Long Distance and Telegraph of Beijing. I waited in line for 5 hours and could not do it. Finally I gave up and sent her and telegragph. In that time, most people could not dream to have a phone line in home in the next few years, never mind the wireless phone. In our mind, it was for spies top officials.
However, within 15 years, China has become the top two or three telecom market. With the current speed, it will take over USA as the number one in wired and wireless phones in just a few years.
For the regular phone lines, I do not have an up to date number, the current phone capacity is already one of the top 2 or 3 in the world.
As a matter of fact, China's wireless phone market will exceed USA in the next couple of months ( basedon some information I just found out today in a Chinese web site):
Wireless customers:
China--- currently 116 millions, grows at a rate of 5 millions per month. With this rate, by the end of this month, it will reach 121 millions.
USA--- currently 117.8 millions, grows at a rate of 5 millions every three months.
Who supplied these cell phones?
Last year, three major foreign suppliers took a total of 76% of market share. They are: Motorola (all fabricated in China, they have invested alot there and ware the number for long time until they missed the digital wave),
Nokia, Erricson. However, in the first five months of this year, their market share dropped to 65%, mainly because the competitions from south Korea and Germany. MOT expects to sell 17-18 millions in China this year.
All the domestic suppliers sold about 5 millions last year.
The major trend this year is the market is spreading in inland from coast cities.
People can better understand why QCOM paid so much attention to the Chinese market: in this eaarly stage, the Chinese market will reach 121 millions this month, that is about three times of South Korea population!!!!
Why the wireless phone market grows so fast? Two reasons: 1) At the early stages, it was viewed as a symbol of social status. Now it is no loger is that reason, but since all other Jacks in the street have one, and you also NEED to have one; 2) at the early stage, the regular phone lines were not easy to get so people jump to wireless.
Now with the telephone network capacity is already very large and grows very fast. For example, the net growth of China's telecom capacity each year is equal to India's total phone network capacity. Just Caton (GuangZhou
city)'s phone network capacity is equal to India's national capacity.
Part of the reason is also because China benefits from the very fact that it had very little to begin with. Therefore it does not have to deal with the old copper lines as USA service providers have to. So they jump into optical fibers and woreless directly.
Withe the huge inland rural area still does not have enough phone lines, the wireless approach is obviousy the best, therefore the market expansion can only be expected to grow further.
My home town is in Northwest China, one of the "poor" inland province. However, each year I visited, more and more people have cell phones. Even in rural area, this is true. I can say this because my mother lives in countryside, not in big city. So this trend is not just for big cities like Shanghai and Beijing.
All these developments are good news for QCOM. I missed the early gains for QCOM in 1999. I hesitate to buy it after that. I can tell all freinds here that I just bought some QCOM recently just because the Chinese market development and QCOM's recent success to pick up some momentum there.
They need to work with the local suppliers and CHU closely. So far, they are doing great. The strategy is right. I may come back talk this part later.
Have a nice weekend!
techprof |
