SHANGHAI, Sept.28 (Reuters) – Chinese automaker Zhejiang Geely Holding (GEELY.UL) announced on Tuesday that its founder, Eric Li, has started a new company to manufacture smartphones, entering the fiercely competitive handset industry as cars are increasingly becoming connected devices.
The move is another foray beyond automobiles for the Volvo owner and marks the reverse of a recent wave of consumer hardware companies venturing into vehicle manufacturing.
The new company, Hubei Xingji Shidai Technology Co Ltd, has signed an agreement to establish a head office in the central city of Wuhan, where it will develop smart devices, including smartphones, according to Geely.
Public records show that Eric Li, also known as Li Shufu, owns 55% of the company.
Xingji Shidai will aim to position itself in the premium segment of the global smartphone market, according to a statement from Geely.
“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.
Although Li has made futuristic bets on companies such as flying cars and helicopter taxis, a foray into phones places Geely in a very 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
Handset shipments to China last year reached 330 million units, an annual decline of 11%. Globally, consumers are taking longer to upgrade to newer models as improvements in performance and functionality are incremental.
Yale Zhang, director of the Shanghai-based consultancy AutoForesight, said the development was surprising and that Geely would be the first automaker in China, if not the world, to enter the smartphone market.
“The possible logic… could be the synergy between the telephone ecosystem and the automotive system in the future,” Zhang said.
Will Wong, who follows the Chinese smartphone market at research firm IDC, said the recognition of the Geely brand in China could give it a head start in 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.
Consumer hardware companies have crammed into the smart electric vehicle industry.
In March, Xiaomi founder Lei Jun said the 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 and Gerry Doyle
Our standards: Thomson Reuters Trust Principles.