Toshiba tips slow 3G sales

By From staff and wire reports

TOKYO, Japan -- Electronics giant Toshiba has predicted only modest near-term growth of sales of third-generation handsets for wireless Internet services.

However, the semi-conductor group expects sales of so-called 3G-enabled devices to generate much higher sales from 2003.

"For 2001 and 2002 I think growth (in 3G handsets) will only be around 15-20 percent," Yoshihide Fujii, general manager for strategic planning at Toshiba's chip division, told Reuters.

"There should be a blossoming from 2003 as wireless cell phones and personal digital assistants (PDAs) become more sophisticated."

Fujii's outlook for this year and the next is slightly more bullish than the conventional wisdom. Although estimates vary, many analysts expect 450 million cell phones to be sold in 2001, a nine percent increase from a year earlier.

Phone sales on the rise

Dataquest Inc, a unit of Gartner Group Inc, said last month worldwide mobile phone sales in 2000 came to 412.7 million units, a 45.5 percent increase from the previous year.

Dominant Japanese wireless carrier NTT DoCoMo will in May become the latest carrier to offer 3G services, allowing data to be transmitted fast enough to deliver video and CD-quality sound to mobile phones.

Korean wireless carriers are already experimenting with limited 3G services, earning Korea a reputation as the world's most sophisticated wireless market. However, they have met with less success than DoCoMo's famed i-mode service.

I-mode allows wireless subscribers a walled-garden Internet experience via their mobile handsets, and has attracted more than 20 million subscribers in an extremely short time.

Increasing sophistication

Mobile phones in Japan are looking increasingly like personal digital assistants (PDAs), offering many of the organizer functions and larger displays seen on handheld computers.

Fujii said that when it comes to cell phones, there were two types of chips to consider.

One is logic chips, which are faster and designed specifically to add functionality to products such as cell phones and digital cameras. These are where Toshiba aims to focus its efforts.

The other is a NAND flash chip, which provides increased memory for small devices. A key problem identified for the growth of 3G cell phones is that they will need a far more memory to store information being downloaded at faster speeds.

"More specifically, we are in discussion with a cell phone firm to provide NAND memory," Fujii said, despite the fact that Toshiba is itself predominantly a mobile handset maker.

Fujii declined to identify the cell phone firm, but said: "We will supply to any top-tier company that needs them."

Reuters contributed to this report.

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