BenQ is closing all of its existing handset production bases and will concentrate handset manufacturing at its new plant in Shanghai, China, according to industry sources.

Construction of the new plant in Shanghai started in March 2006. It is expected to start volume production in the third quarter of 2007 with a monthly capacity of 1.8 million units, and it will become BenQ's sole handset manufacturing base, the sources said.

BenQ has been revamping its strategy for the handset market after making huge losses from its acquisition of Siemens' handset division. Having shut down its handset plants in Taiwan, Mexico, and Germany, BenQ is in the process of ending handset production at its present plant in Suzhou, China, the sources said. Its handset plant in Brazil will also stop operation, the sources added.

BenQ CFO Eric Yu pointed out today that the company already made the decision to adjust handset capacity at the Suzhou plant when it announced it would stop funding German-based BenQ Mobile.

Yu said because of strong monitor shipment growth (at 50%) in 2006, BenQ needs the Suzhou plant to adjust its capacity to meet demand for monitors and other products.

Yu said the new Shanghai plant is at a strategically ideal location for exporting handsets. As BenQ has revised its handset market strategy, the new plant's capacity will be sufficient, Yu added.

According to industry sources, the Suzhou plant in the past had an annual handset capacity of six million units, and orders amounted to 300,000-400,000 units a month. Currently its handset orders are only about 100,000 units, the sources added.