Driven by government stimulus programs and purchases for the Lunar New Year holiday, China's domestic mobile-handset shipments in Q1 2009, up 9% from 53 million units in Q4 2008, paving the way for growth for the entire year, according to iSuppli Corp.

Sales of brand-name GSM-based mobile handsets amounted to 44 million units in Q1 2009, compared to 42 million in Q1 2008. Branded CDMA-based wireless phone sales reached 5.8 million units in Q1, up 200% from the same period in 2008. Domestic white-box handset sales amounted to about 8 million units during the same period, compared to 10 million in Q1 2008.

iSuppli forecasts that China's domestic handset market will amount to 238.9 million units in 2009, up 7.8% from 2008.

"The first quarter is typically strong for China's mobile phone market due to purchases made for the Lunar New Year Holiday in January," said Kevin Wang, director, China research, for iSuppli. "At the same time, shipments were further boosted by demand generated from China's stimulus programs that encourage the purchasing of electronic products. Ongoing reductions in voice-service fees and declines in average handset selling prices will assure stable growth in China's mobile subscribers during the next five years."

The net addition of mobile subscribers for the nation's three wireless operators -- China Mobile, China Telecom and China Unicom -- amounted to 20 million, 5 million and 4 million, respectively, during Q1.

Local brand Tianyu in Q1 surpassed Motorola to become the third largest mobile handset supplier in domestic sales. Nokia and Samsung remain the leaders in the domestic market, with market shares of 34% and 21%, respectively. Meanwhile, Motorola and Sony Ericsson have continued to lose market share during the past four quarters, while local-brand OEMs such as Goinee and OPPO have continuously gained market share.

In terms of total handset shipments, ZTE in Q1 became the largest Chinese handset OEM, with 7.2 million units shipped. Rival Huawei shipped 6.6 million handset units, putting it in the no.2 position in the market. Huawei, however, is the largest data card supplier in the world, and its data card shipments reached 5.1 million units in Q1 this year. iSuppli believes that ZTE and Huawei will continue to grab market share from the international top five, especially in the developing countries.

With the introduction of 3G services in the country by China Mobile, China Telecom and China Unicom, 3G service brands dubbed G3, e-surfing and WO are being promoted by the Chinese telecom operators. At present, data cards and netbooks are the main products offered by operators for 3G service users, but iSuppli expects growth in the domestic 3G handset market to accelerate in 2010.