Worldwide handset component supply will stay stagnant for months before rebounding in the second quarter of 2003, spurred by wider adoption of fast-speed mobile networks and demand for handsets that allow users to send pictures and data files, an industry executive said.
Ray Chen, president of Compal Electronics, noted that after a painful parts oversupply in 2001, an inventory correction is taking place as handset makers grow cautious in their procurement. Still, with the global market weak and new technology simplifying handset design, the supply will remain loose for the year, triggering price cuts and further slashing component costs for handsets, Chen said.
Certain electronic parts will see greater demand than others. For instance, although most handset makers are using 1.4- or 1.5-inch STN LCD screens, the transition into 1.8-inch to 2.2-inch color TFT LCD panels will accelerate next year and increase demand for driver ICs, Chen said.
Like many experts, Chen expected a seasonal uptick for the mobile phone and component industries in the fourth quarter on Christmas buying. A broad-based recovery, however, will not come around until mid-2003, he predicted.
“Without new mobile applications that stimulate user demand, we’re seeing only 380 million in unit handset sales for 2002,” Chen said. Leading phone vendor Nokia earlier predicted worldwide sales of four hundred million this year, flat on last year’s 399.6 million units, when the industry experienced its first decline in history.
Compal Electronics, Taiwan’s second-largest notebook contract maker, also assembles handsets and invests in components for wireless handhelds. Its Taiwanese affiliate Toppoly Optoelectronics produces LCD panels, while US affiliate RF Integrated develops radio frequency (RF) and power amplifier (PA) chips for mobile phones, Chen said.
The company also holds a 48% stake in Taiwan-based International Semiconductor Technology, a test and packaging house for driver ICs and other products. Chen believed that Compal’s full grasp of key supply from upstream parts production to back-end services will be the winning strategy for its wireless efforts.
Article translated by Chou Hua-hsin and edited by Richard So
