Cell Phone Nation: China's Rural Market

Stocks:  (CHL)(TXN)(NOK)(ERIC)(MOT)

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.

Sponsored: Attention Savvy Investors: Speak to 3 Financial Experts – FREE

Ever wanted an extra set of eyes on an investment you’re considering? Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help guide you through the financial decisions you’re making. And the best part? The first conversation with them is free.

Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.