Asia, Africa demand lifts cell phone market

Robust demand from emerging markets in Asia and Africa lifted third-quarter sales of all major handset vendors from the previous quarter, with companies expecting another sales boost from holiday shopping ahead.

All handset vendors combined shipped 285 million mobile phones in the July-September quarter, with strong demand in Asia and Africa lifting sales 12 percent from a year ago, research firm Strategy Analytics said on Thursday.

Top cell phone providers said they envisage that the market will grow more than 10 percent in the holiday sales-fuelled fourth quarter, but analysts said component shortages are starting to cap growth.

Strategy Analytics said the shortage could cut sales by around 5 million phones in the quarter and the problem could, to some extent, continue into 2008.

"We understand that at least four of the world's top five vendors currently have component-shortage issues, mostly in LCDs and front-end components," said Strategy Analytics analyst Neil Mawston.

"Our latest channel-checks indicate an easing of supply constraints toward the December-January timeframe," he said.

The main gainer from the robust demand on emerging markets was the world's largest handset maker, Nokia Oyj (NOK1V.HE), which sold more phones than its three closest rivals combined.

The Finnish company has a strong lead in emerging markets including China and India.

With about 8 million new clients signing up for mobile telephony each month in India alone, the world's leading cell phone makers are falling over each other to woo first-time buyers with low-priced handsets.

But Nokia, the clear market leader in the ultra cheap phones, reported superior profit margins when compared to its rivals.

Nokia's profit margin from cell phone business rose to 22.2 percent in the quarter, while Samsung (005930.KS) and Sony Ericsson's (6758.T)(ERICb.ST) were at 12.3 percent and 12.6 percent, respectively.

Motorola (MOT.N) made another loss from handset operations, while the world's number five, LG Electronics (066570.KS), had a profit margin of 8.3 percent.