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IRG Technology, Media and Telecoms Weekly China Market Review
HONG KONG, Nov 11, 2009 - (ACN Newswire) - The following is the China excerpt from IRG's TMT Weekly Market Review Nov 2 - Nov 8. IRG is a financial advisory and investment firm focused on the core growth sectors in Asia with particular focus on the telecommunications, media and technology (TMT).
Mobile/Wireless
- Smartphone shipments in China is expected to triple by 2013. Sales of handset was at 15.3 percent in China in 2008, a 30 percent increase from 2007. In-Stat sees the next wave of smartphone growth in China to be driven by lower barriers to entry for mobile operating systems and chipset platforms. Smartphone shipments will account for 37 percent of all handset sales by 2012. This will boost revenue to US$191 million. iSuppli sees grey-market phone shipments to hit 145 million units in China in 2009 up 43.6 percent from 2008, and peaking at 192 million units by 2012. It defines grey-market handsets as devices that are not recognized or licensed by local regulators that often use fake International Mobile Equipment Identity (IMEI) numbers.
Telecommunications
- VIA Telecom, a mobile phone chipmaker under VIA Group, will supply TD-LTE products to China Mobile Ltd., according to CEO Ker Zhang. The shipment of mobile phone chips will surge 50 percent in Mainland China next year, bolstered up by the commercial operation of 3G networks and the growing demand in the rural market. VIA Telecom is a major partner of China Telecom Corporation Ltd. It is also the second largest CDMA chip supplier in the mainland, with a 25 percent market share, only next to Qualcomm Inc. The mainland market accounts for 70 percent of VIA Telecom's operating revenues.
- China Unicom (Hong Kong) Ltd. is targeting increasing the number of its third-generation mobile users by more than 1 million a month. The company launched 3G services in China Oct. 1 and had more than 1 million subscribers to the mobile technology standard at the end of that month. China Unicom has signed up more than 5,000 iPhone users in China since it launched the phone there and it expects the Apple phone to boost its average revenue per user. The company is the only seller of the iPhone in China at the moment. China Unicom's high pricing of the iPhone is seen to be limiting demand for the product.
- The 3G industry will bring market demand of 1 trillion yuan (US$146 billion) to China in the coming three years. The nation's telecoms operators will spend around 400 billion yuan (US$58.5 billion) in telecoms network construction. The market that users update their mobile phones will hit 400 billion yuan (US$58.5 billion), and 3G businesses including broadband, mobile phone video are expected to create a market of 200 billion yuan (US$29.3 billion). As of the end of September 2009, China had had a mobile internet user base of 192 million, 62.7 percent increase from a year ago. The nation's mobile Internet market value climbed 54.5 percent year on year in the prior year.
- China Unicom completed buying back a 3.8 percent stake in itself from SK Telecom Co. The Chinese telecommunications carrier will buy back 899.75 million of its shares from SK Telecom at HK$11.105 (US$1.40) each.
- Fidelity Management and Research LLC recently reduced its H-share holding in China's ZTE Corp. to 7.69 percent from the previous 8.01 percent. Information from the HKEx showed that FMR sold 940,000 H shares of ZTE for US$5.4 million on Oct. 30. The average share price of the transaction was US$5.74 apiece. ZTE's third-quarter net profit jumped 58.2 percent due to the Chinese carrier's continuous investment in 3G networks. Revenue for the third quarter rose 43 percent on strong sales of 3G equipment in the domestic market.
-- Xinhua reports citing a source within RIM that negotiations between Research In Motion and China Telecom have entered the final stage. The companies will disclose their cooperation before the end of this year, which will be followed by the launch of communication and e-mail services. The handset maker will introduce more BlackBerry phones in China as well.
- China Mobile Communications Corp. has partnered with the official China Central Television (CCTV) to jointly launch a Chinese-language mobile video news summary service. The news summary, which has not be given an English-language name, is still undergoing testing, but is available on a trial basis in Shanghai for certain China Mobile subscribers. The service will be launched nationwide for both 2G and 3G users following the trials.
- GeoSentric Oyj has partnered with China Unicom to launch the new consumer focused 3G mobile lifestyle service - Unispace powered by the company, for iPhone customers offered via Shanghai Unicom. GeoSentric's GyPSii is a mobile digital lifestyle application and geo-mobility social networking platform: connecting people, places and communities across networks and devices, with patented technologies for the transfer and publishing of location based information between mobile devices. Unispace powered by GyPSii distributed on-deck via iPhone, provides a compelling line up of applications including GyPSii as the only social networking app on-deck at the launch, one of 10 applications pre-loaded and the only non-Chinese provider.
Media, Entertainment and Gaming
- China's online game market revenue size is estimated to hit 7.17 billion yuan (US$1.05 billion) in the third quarter of this year, up 34.5 percent year on year and 6.3 percent quarter on quarter. The market's revenue estimated by iResearch is relatively higher than that provided at the end of October by Analysys International, another market research. The market size increased 66.6 percent, 48.1 percent, 39.5 percent, 32.5 percent, and 32.8 percent in the five quarters ending June 30, 2009, respectively. iResearch believes that the online game market's decelerated growth shows that the industry has matured and now is in healthy development, after its high-speed expansion during its primary stage of development. Tencent Holdings Ltd. remained the No.1 Chinese online game company in the third quarter this year with a market share of 20 percent, ahead of Shanda Interactive Entertainment Ltd, NetEase.com Inc., Perfect World Co., Ltd., and Sohu.com Inc.
- Cisco agreed to acquire the set-top box business of Hong-Kong based DVN (Holdings) Limited for US$44.5 million as part of its broader strategy to compete in emerging markets with locally designed and produced solutions. After the acquisition, it is expected to close in the first half of calendar 2010, the DVN set-top box business will become a part of the International Cable Business Unit within the service provider Video Technology Group at Cisco led by Ken Klaer. The company has also entered into a go-to-market alliance with the remainder of the DVN organization to utilize the company's middleware and advanced applications as well as integration and support services. The investment is part of Cisco's ongoing long-term commitment to China. The Chinese cable market with 160 million subscribers and the Chinese government's plan for full digitization of the market by 2015 offers it a long-term opportunity.
- Giant Interactive is planning to launch of a mobile version of its first trial in online games. The mobile version marked a shift of low-flow game functions to the mobile form to catch online gamers. All the regular functions of the web game have been planted into the mobile platform.
- The Chinese government regulator rejected an application from World of Warcraft's new licensed operator. The General Administration of Press and Publication has turned down Chinese Internet portal NetEase.com Inc.'s application seeking approval for the game. NetEase violated a rule banning new account registration and collection of subscription fees during a trial period that started July 30, when the firm was ordered to revise harmful content in the game. World of Warcraft was previously licensed to The9 Ltd. which ran the game in China for four years from 2005.
Internet
- China ended September with 360 million internet users and 192 million mobile internet users, up 62.7 percent year-on-year, Interfax reports citing figures from the Ministry of Industry and Information Technology (MIIT). Penetration for internet in China was 27.1 percent and 99.33 million people had broadband internet access.
Semiconductor
- A California jury ruled that Semiconductor Manufacturing International Corp. (SMIC) stole and used trade secrets from rival Taiwan Semiconductor Manufacturing Co. (TSMC), possibly putting SMIC on the hook for more than US$1 billion in damages for TSMC. The jury also found that SMIC breached the terms of a 2005 settlement over similar claims, for which it had agreed to pay US$175 million and to surrender all TSMC documents and stop using TSMC technology and processes. TSMC is asking the Alameda County Superior Court panel to award it more than US$1 billion in lost profits and damages, and the judge to permanently bar SMIC from selling the contested products in the U.S. TSMC sued SMIC for theft of trade secrets and patent infringement stemming from chip sales in California.
Networking
- Juniper Networks Inc. is set to invest more in China to enhance its local marketing and R&D. The company has been sophisticated in the development of the IPv6 Internet technology, just waiting for the IPv6 Web's widespread application. The company's routers can co-work with the next-generation Web via cost-free software upgrade. Chinese telecoms operators had made their layouts about the IPv6 Internet technology's marketization and were expected to release the plans in the near future.
Taiwan
- Chipmos Technologies had the closing of privately negotiated transactions with two investors holding in aggregate US$54 million of the Company's 1.75 percent convertible senior notes due 2009 and the repayment at maturity of the remaining outstanding 2009 Notes. Approximately US$2 million aggregate principal amount plus all accrued and unpaid interest on the 2009 Notes was paid on maturity. The repayment was financed through the Company's existing cash from operations. The privately negotiated transactions were first disclosed in the Company's September 29, 2009 press release. The Company and an institutional investor completed the exchange of US$45 million in outstanding 2009 Notes for US$15.3 million in cash and US$15.8 million in new convertible notes of the Company due 2014.
Hong Kong
- TCL Communication Technology Holdings Ltd. will collect at least HK$357.5 million (US$46.1 million) in a one-for-two rights issue to upgrade and expand existing productions. The cellphone manufacturing arm of TCL Industries is offering one new share for every two shares held at HK$1.00 (US$.129), representing a discount of 20 percent to its closing share price of HK$1.25 (US$.161). TCL Communication has production facilities in Huizhou, China and Guadalajara, Mexico. The company said it will develop original design manufacturing business and tap into new markets.
Source: IRG
Sectors: Media & Marketing, Consumer Electronics, Wireless, Apps
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