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Electronics Production | March 23, 2007

Motos' warning hits Asian supply-chain

Motorola has struggled with sliding phone prices as it tried to hold on to its market share despite fierce competition in emerging markets. Yesterday the firm warned on a quarterly loss, shaking the stocks for the Taiwanese suppliers of Motorola.
Taiwanese Foxconn, Mogem, casing maker Chi Cheng, battery packs and PCB assembly supplier Jurong Technologies and Compal Communications dropped sharply on the stock market after Motorola's weak result was announced. Chinese flexible display supplier of the Motofone, E-Ink, as well as other component suppliers, are also seeing serious inventory build-up, according to DigiTimes.

Flextronics and Foxconn are responsible for Motofone's OEM production. They will be affected by any Motorola strategy adjustment. Sources said Flextronics site in Zhuhai, China is facing critical issue concerning idle capacity.

According to Charles Guo, a JP Morgan analyst, Motorola contributes 45 percent of Foxconn's total revenue, Reuters said. Foxconn is planning to invest in a new plant to meet Motorola's orders, has also put those plans on hold, according to DigiTimes.

DigiTimes said Mogem provides casings and decorations for Motorola phones, with sales to Motorola accounting for about 80 percent of its revenue.

Motorola is resuming its partnership with Compal Communications on the production of a new handset, dubbed Long Beach Island (LBI), and fellow Taiwan handset ODMs may see chances to regain ultra-low-cost handset orders from Motorola, DigiTimes report.

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