While 60% of the Chinese who live in a major city have cell phone service, this is only true for 12% of the Chinese in rural areas. China Mobile, the country’s big cell provider already has 287 million customers and estimates are that there are 600 million Chinese living outside its cities.
While the opportunity may be good for China Mobile, it may be the market that makes or breaks the news few years for companies like Motorola, Nokia, Ericsson, and Texas Instruments.
Estimates from Samsung and other large cell providers are for 2007 to be a slow growth year for cell unit sales, perhaps under 10% after several years of 20% plus growth. What will get it back on track. India has a great deal of promise, but the Chinese market is still the world’s largest.
Supporting China’s new 3G standard will not be an easy task. It requires building new chipsets.
But, the big mobile players are not at the top of their games, at least in the stock market. Nokia’s stock has recently fallen from $23 to $20 Motorola’s stock is down from $26 to $22. TI has dropped from over $36 to under $30.
While North America and Europe are still attractive markets, they offer no where near the potential of 600 million souls, many who will buy a cellphone over the next several years. This does not include the replacement market in China as current users upgrade
Texas Instruments is already launching lower cost chips for multimedia phones. The target?
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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