Nokia to boost handset production in China

HELSINKI (Reuters) - Top mobile phone maker Nokia will expand its handset production in China to boost capacity and flexibility to meet fast-growing worldwide demand, particularly from Asia, it said on Thursday.

The Finnish company said it would nearly double the floor space at its factory in Dongguan, with production from the expansion to begin in the third quarter of next year.

The plant currently employs 1100 people, and Nokia would hire another 800 staff as the expansion moves into full swing, Nokia spokeswoman Eija-Riitta Huovinen said.

She said the company would invest about US$14 million in the expansion, but declined to give details of the capacity of the plant.

"It's quite significant, because space-wise it will almost double the area," she added.

Nokia is the market leader in China, the world's biggest mobile market, and employs nearly 6000 people there.

China has about 380 million subscribers currently and about 100 million handsets are sold there each year.

Nokia expects China to add another 250 million subscribers by 2010, but it faces fierce competition from US-based Motorola and local rivals.

It sold 23 million handsets in mainland China, Taiwan, Hong Kong and Macau in the first nine months of 2005, up 77 percent from the year-earlier period.

The company recorded total sales of US$3.3 billion in those markets in the January-September period, and exported US$2.3 billion of goods out of China from its four manufacturing sites in the mainland over the same period.

Nokia says it has invested more than US$2.2 billion in China over the past 20 years and is the largest exporter in the Chinese mobile telecoms industry.

The group has nine mobile handset plants globally and said it expects its Chennai plant in India to be operational in the first half of 2006.

Additional reporting by Rex Merrifield.