Trend: Contract manufacturers gain traction

It appears contract handset manufacturers, those that customize handsets for carriers, are gaining some traction, according to a new report from visiongain, which estimates that outsourced handsets will account for 36 percent of total shipments in 2006, a figure that will rise to 47 percent of all mobile devices by 2009. Flextronics, the leading contract manufacturer, produced 47 million handsets in 2005, putting it close behind the world's fourth-largest handset maker, LG, which made 53 million phones that year, and ahead of Sony Ericsson. Vodafone's recent deal with China-based Huawei to supply Vodafone-branded 3G handsets in 21 countries shows operators are looking beyond Tier 1 manufacturers. Meanwhile, OEMs such as Nokia don't like to dilute their own brand, but they have to become more flexible in working with carriers, said visiongain.

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