Thursday, April 08, 2010
[IWS] USITC: WIRELESS HANDSETS - March 2010 (Industry & Trade Summary)
IWS Documented News Service
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
United States International Trade Commission (USITC)
Industry & Trade Summary
WIRELESS HANDSETS - March 2010
[full-text, 82 pages]
This report addresses trade and industry conditions for wireless handsets for the period
2004 through 2008.
The global wireless handset manufacturing industry is dominated by five top-tier
firms (Nokia, Samsung, LG, Motorola, and Sony Ericsson) which collectively accounted
for more than 70 percent of total sales throughout the period. Motorola is the largest U.S.-
based producer in this extremely competitive industry and was the world's fourth largest
handset producer in 2008. Leading second tier firms include Apple, Research in Motion,
and HTC. The global supply chain for wireless handsets is concentrated in Asia; U.S.
production is limited. Heightened domestic and international competition has resulted in
the outsourcing of production, industry consolidation, firm specialization, and decreasing
Worldwide technological leadership in product design is concentrated in the United
States, Finland, Korea, and the United Kingdom. Strong research and development (R&D)
capabilities are imperative to leading firms in the industry. Up to one-third of the
workforce of handset manufacturers is engaged in R&D activities, and firm level annual
R&D spending amounts to $2–$4 billion. Major manufacturers have R&D facilities
throughout the United States, including Texas, Florida, Arizona, Illinois, California, and
Manufacturers traditionally competed on the basis of price, but they increasingly
focus on innovations in product design that allow users to perform a wide variety of
functions beyond traditional voice services, including texting, e-mail, digital mapping,
and storage of music and photos. Smartphones, also known as converged devices, are the
fastest-growing and most profitable segment of the overall market for wireless handsets.
U.S. sales of smartphones rose from 4.5 million and 5 percent of total handset sales in
2004 to 27.3 million and 28 percent of total sales in 2008.1
Because most handsets are produced in Asia and Latin America, the U.S. trade deficit
for this product was large and widened substantially over the period, from $18.1 billion in
2004 to $30.7 billion in 2008. China accounted for 50 percent of U.S. imports in 2007
and 40 percent in 2008.
Most countries involved in wireless handsets trade are signatories to the Information
Technology Agreement (1997), which eliminated tariffs on high-technology equipment,
including wireless handsets. A notable exception is Latin America, where many countries,
excluding Mexico, impose tariffs on imports of wireless handsets of between 10 and
Global consumption of handsets is bifurcated into low-cost, voice-centric devices and
high-level information appliances. Market growth in more sophisticated markets with
higher penetration rates and income levels, including Europe and the United States, is the
result of existing consumers upgrading to new devices. In the rest of the world, rapid user
uptake is driving enormous volume increases. India and China were the two fastest
growing markets for wireless handsets in the world in 2008, respectively achieving
48 percent and 17 percent annual growth.
1 Telecommunications Industry Association (TIA), "2009 ICT Market Review and Forecast," 246.
2 USITC staff, e-mail communication with the Department of Commerce, May 8, 2009.
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