Chinese competition hits mobile profits
Posted on February 27, 2008
Filed Under Vnunet |
Simon Burns in Taipei, vnunet.com, Tuesday 26 February 2008 at
00:00:00
Jobs under threat at established telecoms vendors
Strong competition from Chinese firms is eating into profit margins at
mobile infrastructure manufacturers worldwide, according to analyst reports.
Along with a global slowdown in the rate of mobile network expansion, the
growing competition could threaten jobs at established telecoms vendors. Fierce
competition in the market for base stations and other infrastructure from
China’s two largest telecoms equipment makers, Huawei and ZTE, has been eroding
profit margins and market shares, say analysts at IMS Research. “The market has
been growing at 10 per cent or more each year, so this was not a problem. But
this is going to change with the new market conditions,” said Matia Grossi,
lead infrastructure analyst at IMS Research. “The recent announcements [by
Nokia Siemens, Ericsson and Alcatel-Lucent] of thousands of voluntary
[redundancies] in the following years is a clear signal of what is going on in
the market.” Huawei and ZTE have often struggled to win market share in more
mature telecoms markets, but have been more successful in emerging markets
which are likely to see far more growth. “There will be regions and countries
where growth is set to continue at an incredible pace, such as India, Africa
and Southeast Asia, but this is not going to compensate for the saturation in
more mature markets,” Grossi added. “The number of base stations shipped each
year has basically doubled. In the past three years, in countries where
operators have already reached a good geographical coverage, they are now
relying mostly on software upgrades to increase the capacity of their networks.
“They are relying on additional base stations or [transceivers] only if they
have no other choice.”
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