Domestic handset manufacturers can still make huge profits despite the fierce price war, and mobile phone prices can continue to drop by 15-25 percent, said Luo Qingqi, an industry expert, sina.com.cn reported today.

Nearly 250 million mobile phones are predicted to produce this year, while only 60 million handsets are needed in the domestic market, which will intensify the price war, the expert said.

Handset makers can still make an average of 20-30 percent of profit returns currently despite the price war, he said.

Tougher competition will keep trimming the profits in the mobile phone industry, with profits down to 5-10 percent, that is to say, handset prices are expected to drop by 15-25 percent in the near future, the expert said.

The average price of handsets reaches 1,500 yuan (US$181) currently, with the price expected to drop to 1,000 yuan, he added.

"It is an inevitable trend for the handset prices to drop," said Huang Aiping, vice president with the Amoisonic Electronics Co Ltd.

Home appliance hypermarket is expected to become the main sales channel for mobile phones, with large retail chain network cutting sales cost, said He Ju, general manager with the sales center of Guomei Electrical Co Ltd.

However, the handset price slump is expected to occur after the drop of handset calling fees which are the highest around the world, He said.

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