Taiwan Hit by iPhone Craze

The surest sign marketing hype surrounding the iPhone has outdone itself is that a small island on the Pacific rim is abuzz over the device, despite the fact it won't be on sale here until next year at the earliest.

Part of the reason for the excitement is the number of technology savvy users in Taiwan who want to get their hands on one.

The most popular Internet auction site on the island, run by Yahoo Taiwan Inc., boasts six different iPhone sellers. One auctioneer is offering the smartphones at NT$32,000 (US$975), on pre-order. At a rival Web auction site, Ruten.com.tw, one seller has a 4G-byte iPhone for NT$25,000.

Most of the sellers are up-front about the fact users may not be able to use the iPhone for phone calls in Taiwan, for now. "You may only be able to use the camera and music player function of the iPhone," writes one seller.

That may not deter buyers. Not only is the iPhone viewed as a status symbol, many Taiwanese often travel to the U.S. for business, and a number of people own second homes in places such as California. They could sign an AT&T iPhone service agreement on a trip to the U.S.

The popularity of the Apple Inc. product is easy to see every day, in newspaper headlines and on the cover of magazines, including Business Next, which says a lot about the other reason the handset is so popular in Taiwan. Taiwanese companies play a vital role in the production of the device, and rumors of which company is making what component on the iPhone are moving stock prices daily in Taiwan. Apple is sourcing a number of parts from the island, and has asked iPod manufacturer Hon Hai Precision Industry Co. Ltd. to assemble the iPhones in China, analysts say.

In fact, the stock market boom that has taken hold in Taiwan recently has been attributed partly to iPhone hype. Stock traders hope the iPhone sells millions of units, because companies on the island stand to win from every handset sale.

Largan Precision Co. Ltd., for example, supplies camera lenses and modules for the iPhone, according to CLSA Asia-Pacific Markets in Taipei. Foxconn Technology Co. Ltd. is a provider of metal casing for the handsets, while Unimicron Technology Corp. is supplying printed circuit boards for the device and Cheng Uei Precision Industry is making its chargers and cables, the investment house says.

The stock prices of many of these have soared in the months leading up to its launch, but are in a holding pattern now as investors wait to see how the iPhone fares in the market.

Estimates of iPhone sales vary widely. Citigroup Research, a division of Citigroup Global Markets Inc., estimates iPhone sales will reach 3.5 million in 2007 and 8.5 million in 2008. That's ahead of Apple's own prediction of 10 million over the same period. Deutsche Bank is even more positive about the iPhone. The investment firm expects 7.5 million of them to ship this year and 12 million in 2008, according to a report dated June 22.

An even more optimistic forecast comes from financial services company Credit Suisse, which predicts iPhone shipments will reach 5 million this year and 15 million next year.

"Apple's iPhone, expected to launch at AT&T on June 29, is clearly the most widely anticipated product the industry has seen for many years, potentially ever," wrote Credit Suisse analyst Michael Ounjian, in a June 5 report on the device.

Lehman Brothers Inc. offered a more conservative estimate, saying Apple's own 10 million figure "may be difficult to reach" but that the figure "is achievable" in a June 21 report. The investment house believes Apple will start offering the iPhone in Europe sometime in the last three months of this year, and that it will begin sales in Asia in 2008. Apple has not said when it will start shipping the iPhone overseas.

The iPhone, a smartphone with built-in iPod music player functions, goes on sale in the U.S. at 6 p.m. Friday. Apple is offering two models, a 4G-byte model costing US$499 and an 8G-byte model at US$599. Users will have to sign a two-year contract with AT&T Inc. for phone service.

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