ZTE set to expand mobile biz for 5G edge

Chinese telecom equipment maker ZTE Corp is putting great efforts to further expand its mobile devices business, betting big on market opportunities brought about by the large-scale usage of the new-generation 5G network.

Ni Fei, senior vice-president of ZTE and president of the company's mobile devices business, said more than 100 million units of ZTE's terminal devices are expected to be delivered this year, half of which will carry self-developed chips. The devices are used in personal communication, homes, internet-connected vehicles, industrial monitoring and other areas.

ZTE's terminal business saw robust growth in the first half, with revenue from the domestic market surging 150 percent year-on-year and overseas income increasing 50 percent, he said at the ZTE Analyst Conference 2021 held online on Monday.

The company aims to achieve an annual growth rate of more than 200 percent for the domestic market and more than 50 percent for the overseas market, Ni said.

"The 5G trend is sweeping the world, the consumption scenario continues to expand, and the market is gradually recovering from battling COVID-19," he said.

"Facing new opportunities for the market development of 5G smartphones and mobile internet products, ZTE mobile devices will go all 5G in the future, continue to consolidate the 'big terminal' product strategy, and build a new future for 5G with full-scenario intelligent experience."

While some analysts are concerned whether the global chip shortage facing the whole industry could affect ZTE's business development, the Shenzhen-based company said it has the confidence and capability to cope with the issue.

"For our supply chain, we have made preparations from three aspects," said Xie Junshi, ZTE's executive vice-president and chief operating officer. "In research and development, we are striving to enhance compatibility. That means more options to avoid the constraints caused by exclusive suppliers. In addition, we have strengthened strategic cooperation with leading suppliers to protect and improve our supply chain. Also, we are improving our capability of anticipation, which is a prerequisite for building a resilient organization."

Xie stressed the importance of continued globalization, saying the company plans to increase 5G-related investment in emerging markets in the Asia-Pacific region, global operator markets and strategic markets the company has already entered in Europe. He added the company has started R&D in 6G and could apply key 6G technologies in 5G networks.

ZTE reported 83.83 billion yuan ($13.14 billion) in operating revenue for the first three quarters of 2021, up 13.1 percent year-on-year, its latest financial report said. Net profit surged 115.8 percent to 5.85 billion yuan.

Luo Lu, an analyst from Sinolink Securities, wrote in a note that she holds a positive outlook that ZTE will become one of the biggest beneficiaries with the rebalancing of the telecom equipment market in the 5G era, and expects its new businesses such as digital transformation automotive electronics to see rapid growth.

But there are risks that could affect the process, such as lower-than-expected level of 5G commercialization, Sino-US trade tensions, and an exodus of talent, she said.