As developing countries around the world embrace cellular and mobile phones, the demand for the ultra low-cost handset is growing rampantly. Below $20, the phone is also attractive for the developed world. Studies by the World Bank show that while 77% of the world’s population live within range of a mobile network and only 25% subscribe to a mobile service. By offering handsets below $20, Royal Philips Electronics hopes to bring mobile solutions to a customer base that includes approximately 3.3 billion people.

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To develop ultra low-cost mobile communications solutions for emerging markets, Royal Philips Electronics has opened a new design center in Shanghai, China. The design center is part of an overall initiative to address the growing consumer demand for ultra low-cost handsets in China, India, Africa, South America and Eastern Europe by driving down total handset costs below $15 by 2008.

The center will steer Philips’ ultra low-cost activities in China, working closely with the European design facilities and the Bangalore, India-based innovation campus to help original design manufacturers (ODMs), OEMs and operators dramatically reduce costs and bring handsets to the consumer for less than $20. The latest development equipment, local technical support and hardware and software design expertise are all part of the new center, ensuring customers can have design challenges quickly addressed and speed their time-to-market.

“An untapped global consumer base of 3.3 billion people in key markets represents a huge opportunity for handset manufacturers and operators alike,” said Frans van Houten, president and CEO, Philips Semiconductors. “With Philips’ ultra low-cost Nexperia cellular system solutions and dedicated local support through the design center, manufacturers can quickly develop affordable handsets to enable consumers to connect to each other and to entertainment, information and services while on the move.”

The Philips Nexperia cellular system solution 5130 contains all the hardware, software and peripherals necessary for building low-cost mobile phones. Taking it one step further, Philips has worked together with China TechFaith Wireless Communication Technology Limited (“China TechFaith”), a handset application software and handset solution provider based in China, to deliver a reference phone, thus giving manufacturers access to a tried-and-tested, ready-to-produce handset that has been engineered specifically to meet the needs of consumers in emerging markets.

“Our partnership with Philips will go a long way toward helping handset manufacturers deliver tried-and-tested solutions that will enable them to rapidly break into emerging cellular markets,” said Bob Huo, president of China TechFaith. “Philips' heritage of technological innovation, consumer insight and customer support, coupled with our design know-how and competitive costs, will help speed up the production of ultra-low-cost handsets.”

“The new handset will help relieve the financial and operational risks manufacturers face when deploying new, and often unproven, handsets in emerging markets by reducing development and production costs, and improving time-to-market,” stated Tony Lear, senior vice president and general manager, Greater China of Philips Semiconductors. “The first commercially available ultra low-cost handsets based on the Nexperia cellular system solution 5130 will offer voice, SMS and basic multimedia capability, with a black and white screen, providing the basic functionality and low cost desired by new subscribers in emerging mobile phone markets.”

According to Philips, production of devices based on Nexperia cellular System solution 5130 can start within three months after contract signature, with mass production expected to take place in early 2006.