Chinese automaker Geely founder launches smartphone business
SHANGHAI, Sept.28 (Reuters) – A new venture from the founder of Chinese automaker Zhejiang Geely Holding (GEELY.UL) will aim to launch its first smartphone by 2023 and sell 3 million units in its first year, according to a memo seen by Reuters.
Volvo owner Geely announced on Tuesday that its chairman Eric Li, also known as Li Shufu, will be launching a new company that will manufacture high-end smartphones, bringing it into a competitive industry dominated by a handful of giants.
Although Li has made futuristic bets on companies such as flying cars and helicopter taxis, a foray into phones places Geely in a highly competitive industry that is no longer growing in China and is dominated by a handful of players. including Apple, Chinese Xiaomi Corp (1810 .HK) and others. Read more
Geely is the first established automaker to commit to selling smartphones, although smartphone makers are venturing into the electric vehicle market.
“There is a strong link between technologies within intelligent vehicle cockpits and smartphone technologies,” Li said in the statement. “The major trend in the coming future is to create user ecosystems across borders and provide users with a more convenient, smarter and seamlessly connected multi-screen experience.
The statement said that Li’s new company, Hubei Xingji Shidai Technology Co Ltd, has signed an agreement with Wuhan Economic and Technological Development Zone to establish a headquarters in the central city of Wuhan, where it will develop smart devices, including including smartphones.
Public records show that Li owns 55% of Xingji Shidai.
According to an internal memo seen by Reuters, the project will be funded with an investment of 10 billion yuan ($ 1.55 billion) and also targets a turnover of 10 billion yuan in its first year.
It aims to achieve cumulative revenue of 150 billion yuan in eight years, employ 3,000 people and ultimately go public, the note also said. Geely declined to comment on the note.
Handset shipments to China last year fell 11% to 330 million units. Globally, consumers are taking longer to upgrade to newer models as improvements in performance and functionality are incremental.
Will Wong, who follows the Chinese smartphone market at research firm IDC, said the recognition of the Geely brand in China would help it break into the high-end market.
“Nonetheless, Geely’s mobile phone business will likely focus more on strengthening its ambitions for the development of intelligent vehicles, in which all automakers are looking for a key differentiator to be successful,” said Wong.
Globally, Apple leads the market for phones priced above $ 400, with a 57% market share, according to Counterpoint Research. Samsung follows with a 17% share.
Consumer hardware companies have crammed into the smart electric vehicle industry.
In March, Xiaomi founder Lei Jun said his company would officially enter the electric vehicle market and invest $ 10 billion over the next 10 years. Huawei and Foxconn have also entered the industry through partnerships, while Apple is said to have conducted research and development for its own smart car.
Reporting by Josh Horwitz and Brenda Goh; Editing by Tom Hogue, Stephen Coates, Tony Munroe, Gerry Doyle & Simon Cameron-Moore
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