Telecom & Wireless

As China's Mobile Markets Slow, Handset Companies Face More Problems

china1The recent earnings numbers from China’s big telecom firms illuminated more than their profitability.

One of the assumptions about the health of the global handset makers and companies that build hardware for 3G systems has been that, as growth of mobile penetration slowed in the US, Japan, Europe, China and India would more than pick-up the slack.

That critical assumption is turning out to be wrong. Writing about the Chinese wireless market and the largest cellular provider in the country, The Wall Street Journal reports “Mobile penetration is only 50%. But the company’s number of new subscribers fell 6% in the first quarter from the previous quarter.” To some extent that is because many of the potential new customers live in rural areas and are less likely to need or want a phone. Many simply cannot afford one.

The data has to be a blow to Nokia (NOK), Motorola (MOT), Samsung, and Sony Ericsson. The four largest makers of handsets have already reported large drops in units shipped during the first quarter. If China’s demand falls off it will be very hard for those numbers to improve much.

China’s mobile market could reach 1 billion subscribers, if market penetration moved even close to what it is in Japan and the US. But, farmers don’t want cellphones and that can’t be changed.

Douglas A. McIntyre

Want to Retire Early? Start Here (Sponsor)

Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?

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 you build your plan to retire early. 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.