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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: Caxton Rhodes who wrote (20054)	3/7/2002 10:18:31 AM
From: Caxton Rhodes	Respond to of 196959

China's Legend enters mobile phone market *Don't know if this was posted already**** REUTERS [ MONDAY, MARCH 04, 2002 12:42:29 AM ] EIJING: China's top personal computer maker Legend Holdings Ltd on Wednesday entered the country's massive but crowded mobile phone market through a joint venture. Texas Instruments will supply the chipset technology for Legend's joint venture with Xiamen Overseas Chinese Electronics Co Ltd, which plans to make mid- to high-end handsets that will hit the market beginning in June, Beijing-based Legend said in a statement. Legend said that it would invest 90 million yuan ($10.87 million) in cash for a 60 per cent stake in the joint venture and Xiamen Overseas (Xoceco) would invest 60 million yuan in the form of production lines and related equipment for a 40 per cent stake. Legend president Yang Yuanqing said in the statement he believed China's mobile handset market, already the world's largest, would continue growing. It is now dominated by foreign giants Nokia and Motorola Inc with a collective two thirds of the market, but Yang said there were still profits to be made. "The market potential is huge, it's even bigger than China's PC market. And domestic brands are on the rise," he told a news conference in Legend's fancy new glass and steel headquarters. China had nearly 150 million mobile users at the end of January, with 46.55 million handsets sold last year. The government predicts a growth rate in handset demand at more than 30 per cent over the next three years. But Yang said that the mobile phone venture, which would make the phones in the southeastern city of Xiamen and plans to ship between 500,000 and one million units a year, was unlikely to be profitable in the first year. "I don't think anyone can make money until you've reached two million units. And that would involve lots more investment in production facilities," said Viktor Ma, an analyst at Morgan Stanley in Hong Kong. While just 11 per cent of handsets sold in China last year were domestic brands, market share for local players is growing, led by Ningbo Bird, China Kejian Co and the TCL Group, according to JP Morgan. "All the foreign names are losing market share except Nokia, Motorola and Samsung," said JP Morgan analyst Johnny Chan, who predicts home-grown players will increase their mainland market shares to 15 per cent this year. Legend dominates the mainland PC market with a share of roughly 30 per cent, although sluggish sales in the last calendar quarter of 2001 underscored the concerns of some investors and analysts that Legend should diversify into other product lines, and perhaps increase its non-China business. "They should have gone into this business earlier, in my opinion," said JP Morgan's Chan. In the handset business Legend will leverage its brand, sales savvy and understanding of consumer preferences, he said. Xoceco, for its part, brings an existing, albeit small handset business, which sold about 260,000 self-branded phones last year and made another 250,000 for other vendors. The phones produced by the venture will initially be based on the European GSM standard that predominates in China, as well as its successor GPRS technology. Legend said that the venture had not ruled out making handsets for use on the recently launched mainland network, which uses the competing CDMA standard. "But when we would do that would depend on the market," Yang told reporters. JP Morgan's Chan estimated that the handset replacement rate among mobile customers in China last year was 25-30 per cent - exceeding the global average. Under the deal with Texas Instruments, Legend will use the US company's chipsets for its handsets starting later this year. Legend also said that it would use Texas Instruments chipsets to develop Internet-enabled wireless devices and other products. Shares in Legend rose 3.12 per cent on Wednesday to close at HK$3.30, although the counter was down by 47.58 per cent from a year earlier as of Tuesday. Some Hong Kong newspapers had reported that Wednesday's announcement was to have involved personal digital assistants (PDAs).