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Mobile Phone Makers Suffer Intensifying Parts Shortages
Posted: 01-May-2000 [Source: Nikkei Electronics]

[Parts shortages will continue to plague Mobile Phone manufacturers for some time to come according to this report.]

Tokyo -- "The shortage of components for mobile phones is intensifying. Although Japanese parts makers hold a high market share for components for use in mobile phones, their supply capacity has not caught up with the world's exploding demand.

"Many analysts expect that shortage of components will continue until the second half of 2000 at the shortest, and probably will remain after that. Worldwide makers of mobile phones have been taking turns inching past each other in their competition to procure components that are scarce.

"It is likely that mobile phone makers will reconstruct their business practices to keep company with parts makers for their survival.

"The shortage of components for mobile phones surfaced in mid-1999. Since then, many mobile phone makers in Japan have been unable to execute their production required by mobile phone service operators.

"The shortage is due largely to the supply-demand imbalance of components.

"The mobile phone market is rapidly expanding far beyond expectations. According to the Electronic Industries Association of Japan (EIAJ), worldwide shipments of mobile phones in 1999 were 279 million units, up 64 percent from the previous year. Last summer, it was forecast at as many as 235 million units. Therefore, actual shipments topped the forecast by more than 40 million units.

"This trend is likely to continue for quite some time. According to Nikko Solomon Smith Barney Ltd., demand for mobile phones will rack up growth rates of 30 percent to 60 percent annually, and approach 1 billion units in 2003. The shortening trends in users' renewal periods also support the growth of demand.

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