August 9, 2011 / 3:52 AM / in 6 years

UPDATE 2-China's ZTE posts healthy mobile growth, eyes US prize

* Says shipped 35 mln mobile devices in H1, up 30 percent

* Aims to ship 12 mln smartphones in H2

* HK shares fall 4.5 pct, out-performing as markets tumble (Adds comments from company)

By Melanie Lee

SHANGHAI, Aug 9 (Reuters) - China’s second-largest telecom equipment maker ZTE Corp is confident it can beat its 2011 target of shipping 80 million mobile devices and is looking for an expanded U.S. footprint to fuel growth.

The world’s sixth-largest cellphone vendor, which shipped 35 million units in the first half, is also aiming to ship 12 million smartphones, which mainly run Google Inc’s Android operating system, for the rest of the year. It sold 5 million smartphones in the first half.

ZTE manufactures a mix of low-end and high-end smartphones for Western markets and will roll-out its star product “Skate” in Europe this month and launch it in China within three months, He Shiyou, ZTE Executive Vice President, told reporters.

He said the firm was aiming to ship 1 million “Skate” phones by the end of the year.

ZTE, like its bigger Chinese rival Huawei , is hoping to rely on consumer devices to drive growth. Earlier this month, Huawei launched its first cloud computing smartphone to complement its range of lower cost phones.

“I wouldn’t say the low-end smartphone is a completely new market. I would say that they are just replacing some of the demand in higher-end feature phones.” said Zona Chen, an analyst from Samsung Securities.

”Now I think it’s a game for the low-end smartphones, so I would say the competition is quite healthy and I‘m sure no matter it’s Huawei or ZTE, they will have the chance to gain market share from the big guys.

Overall shipments, including cellphones, smartphones, tablet PCs and wireless dongles, rose 40 percent to 60 million units during the January-June period.

CROWDED MARKET

ZTE Hong Kong-listed shares fell more than 10 percent before recovering losses, trading down 4.5 percent compared to a 5.6 percent drop in the broader index on Tuesday.

The firm is also aiming to make the United States its top market in sales in the next five years, said He. The United States forms 10 percent of ZTE’s handset business, behind Europe which makes up 15-20 percent and China’s 35 percent.

“Success in the United States is the proof required to say you have global success,” He said. ZTE recorded 300 percent growth in the U.S. market in the first half.

Chinese technology companies are the latest entrants into an increasingly crowded smartphone manufacturing sector dominated by Apple Inc , Nokia and Samsung Electronics .

Apple and Samsung Electronics ended struggling Nokia’s 15-year reign at the top of the smartphone sales rankings in the second quarter, researchers said on Friday.

Nokia has dominated the smartphone market ever since its 1996 launch of the Communicator model, but competition from its two nearest rivals and a slump in its own sales sent it straight from first to third place in the three months to June as growth in the sector starts to slow.

In the first quarter, ZTE was ranked the sixth-largest handset maker by unit shipments globally, ranking behind Nokia, Samsung, LG Electronics Inc , Apple and Research In Motion , according to Gartner.

ZTE also has plans to launch LTE (long term evolution) devices in the United States in the second half of this year and smartphones based on Microsoft’s Mango operating system early next year.

China’s Alibaba Group also recently launched its first self-developed mobile operating system and smartphone running on its cloud computing-based operating system. (Additional reporting by Jerry Huang in Hong Kong and David Lin in SHANGHAI; Editing by Kazunori Takada and Lincoln Feast)

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