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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 152.66+0.7%Feb 2 3:59 PM EST
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To: Wyätt Gwyön who wrote (110469)1/8/2002 1:46:16 PM
From: slacker711  Read Replies (1) of 152472
 
don't you think they will have slower growth soon though? most Chinese are way too poor to afford a cell phone. i would guess addressable market penetration is not that far behind the US.

I have no doubt that the cellular market in China is going to begin to slow. Let's say the explosive growth is going to end at somewhere around 200-225 million. China will then begin a steady state growth somewhere above there GDP growth (I think that this is generally true for the communications sector). If China is growing at 8% then we might see 10-12% growth in mobile phone subscribers.

This would give us a market for 20-27 million new subs a year. Let's say churn averages 1.5% a month (well below most of the world's average of 2.5-3%). This would give us a total market of somewhere around 60 million handsets purchased a year.

If you look at China Unicom's plan for their networks you will see that their plans for GSM growth come to a virtual standstill after next year. If China Unicom can mantain there marketshare around a third of all new subs we could see around 20 million CDMA units a year being sold.

As I have said before, the wildcard is the decisions of the Chinese government. If they decide it is in there best interests to start supporting a domestic handset manufacturing industry we could see even higher totals. If relations between the US and China deteriorate we could see Unicom renew their GSM build-outs.

Slacker
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