Analysis: In China's smartphone boom, market share trumps margins

[Wireless News]

http://l3.yimg.com/bt/api/res/1.2/XNGYHiyNtr8zPvJK5.5d3w--/YXBwaWQ9eW5ld3M7Zmk9ZmlsbDtoPTg2O3E9NzU7dz0xMzA-/http://media.zenfs.com/en_us/News/Reuters/2013-11-18T165123Z_1_CBRE9AH1AUJ00_RTROPTP_2_CTECH-US-SMARTPHONES-CHINA-ANALYSIS.JPG (http://news.yahoo.com/analysis-chinas-smartphone-boom-market-share-trumps-margins-165123449--finance.html)Savvy U.S. chipmakers are hitching their wagons to Chinese smartphone makers, willing to sacrifice profit margins to boost sales volumes in the world's second-largest mobile phone market. As demand in developed economies stagnates, a handful of component suppliers, including Qualcomm Inc and Synaptics Inc, have left competitors in their wake by expanding in China, where sales of cheap phones made by home-grown companies eclipse pricier models made by Samsung Electronics Co Ltd and Apple Inc. Increased exposure to China has diluted chipmakers' gross profit margins to somewhere in the mid-40 percent range from an average of nearer 50 percent in developed markets, analysts estimate. "The guys that have traditionally been focused on the developed markets are now starting to see a slowdown," said Stewart Stecker, research analyst at asset management firm AlphaOne Capital Partners. "The guys that are most focused on emerging markets are seeing healthy growth rates." Brisk demand for low-priced Android devices in China was the main driver of a 39 percent jump in global smartphone shipments during the quarter ended September 30, according to data published by market research firm IDC.



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