China's top telecoms equipment maker Huawei Technologies expects its annual contract sales to hit US$11 billion this year, representing 34 per cent year-on-year growth.

In the first half of this year, Huawei, based in Shenzhen, South China's Guangdong Province, recorded contract sales of US$5.2 billion, up 29 per cent year-on-year, the firm said.

Overseas sales during the period surged 36 per cent to US$3.4 billion, accounting for 65 per cent of its total contract sales.

Mobile phones are becoming a new driver fuelling the revenue growth of Huawei, one of China's rising technology stars.

By September, Huawei shipped more than 12 million wireless terminals including mobile phones and data cards, which are used to enable notebook PC users to connect to the mobile broadband Internet.

Company Vice-President Guo Ping expected the firm's shipment volume to hit 20 million units by the end of this year, double that in 2005.

"Our wireless terminal business is expected to generate US$1 billion this year," Guo, who is also president of Huawei's Terminals Business Unit, said on the sidelines of the ITU Telecom World 2006 in Hong Kong.

Huawei has mainly been focusing on the telecoms equipment business, but in recent years has stepped up efforts to crack the wireless terminal market by customizing handsets for leading global operators such as Vodafone, Telefonica, and Hong Kong's SmarTone and PCCW.

Earlier this year, Huawei signed a five-year global supply deal with Vodafone for exclusively Vodafone-branded handsets based on the third generation (3G) mobile technology.

The deal marks a major breakthrough for Huawei in the European handset market. Vodafone, the world's largest cellular operator by revenue, has also signed a network equipment supply deal with Huawei.

Currently, Huawei's handset sales mainly come from overseas markets, but Guo said he expected the firm to grab a larger share of the domestic market.

However, Huawei faces major challenges in the domestic handset market, which is dominated by manufacturers rather than operators. Pang Jun, an analyst with retail data tracking firm GFK China estimates that customized phones currently account for about 15 per cent of China's total market.

But Guo said customizing mobile phones would remain Huawei's top priority.
"As a leading networks equipment maker, we know what operators need (to attract consumers)," he said.

"3G mobile telephony, which features more data services such as video calls and mobile Internet access, helps operators differentiate themselves from each other. And that is offering Huawei a big business opportunity."

Huawei, which last March secured a licence from the Chinese Government to make and sell mobile phones in China, has already customized some handset models for China Unicom, the smaller of the country's two cellular operators.

Editor: Donald