Cell-phone distributors shift orders from South Korea back to Taiwan

Dec 17, 2003 Ι Industry In-Focus Ι Electronics and Computers Ι By Ken, CENS
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Taipei, Dec. 17, 2003 (CENS)--Domestic distributors of own-brand cell phones, including Arcoa Communication Co., Ulycom Technology Inc. and Systex Corp., are shifting orders back to Taiwan from South Korea.

Arcoa has switched orders from a South Korea-based contract manufacturer to Taiwan's Arima Communication Corp.; Ulycom will introduce a series of brand-new color cell phones in December to be contract manufactured by consigning Lite-On Electronics Inc.; Systex has contracted Compal Electronics Inc. to produce five new models of cell phones supporting its own 'XG' brand.

At present, Ulycom's Uly-com A7 and Arcoa's first own-brand MGH840 cell phones are manufactured by South Korean manufacturers. But Arcoa has consigned Arima to manufacture own-brand p368 and P268 models for the first time in November. Ulycom plans to introduce four models of high-tier color cell phones within the next two or three months, one of which will be contract manufactured by Lite-On but with 'Hitachi' brand.

Domestic distributors said they has seen gross profit margin slip to 4% to 7% from 10% in selling such big brands as Motorola and Nokia. In an attempt to raise the profit margin, domestic distributors are forced to develop own-brand products.

Due to their small contract production amount, last year domestic distributors of cell phones couldn't place contract orders with domestic large-sized cell-phone manufacturers and had to seek cooperation from South Korea manufacturers.

Since the beginning of this year, domestic manufacturers of cell phones, including Arima, Compal Electronics Inc., and Compal Communication Inc., have been seeking potential clients, including regional distributors, because they have seen a sharp drop in contract manufacturing for international big brands.

A domestic manufacturer of cell phones said the profit margin of contract manufacturing for international big brands has slipped to between 10% and 15%, compared to 20% to 25% for contract production for local distributors.
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