UPDATE 1-China's ZTE says 4G phones will be 40 pct of 2014 shipments

Thu Mar 27, 2014 2:32am EDT

(Adds quotes, context on 4G, smartphone sales)

By Yimou Lee

HONG KONG, March 27 (Reuters) - ZTE Corp , the world's seventh-biggest smartphone maker, sees sales of 4G smartphones accounting for at least 40 percent of its global smartphone shipments in 2014, a company executive said on Thursday.

Shenzhen-based ZTE, smaller than its cross-town rival Huawei Technologies Co Ltd, aims to ship 60 million smartphones in 2014, up 20 million units from last year, ZTE global head of mobile devices Zeng Xuezhong told a press conference in Hong Kong.

"Traditionaly, our smartphone business is strong in the USA, Japan and Europe. But this year we will add China to that list," Zeng told reporters.

"We have released our high-end models in China, and we will also launch our 1000-yuan cellphone on a large scale in March. So we are very confident in our LTE phones."

ZTE returned to net profit last year after making a loss in 2012, it said on Wednesday. However operating revenue for the year dropped 10.6 percent, its biggest decline on record, to hit the lowest level in three years.

But ZTE is still behind domestic competitors Huawei and Lenovo Group Ltd, who are respectively the number 3 and 5 in the world by smartphone shipments, according to IDC.

Huawei shipped 48.8 million smartphones last year, IDC said. Lenovo, which acquired the Motorola Mobility handset unit from Google Inc in January, shipped 45.5 million units.

However, as telecoms equipment makers, ZTE and Huawei are set to reap the rewards of contracts to build high-speed 4G mobile networks around the world. ZTE predicts global spending on 4G will be $100 billion in 2014.

ZTE, Huawei and Lenovo are still dependent on China for the vast majority of their smartphone sales. Huawei and ZTE are set to doubly-benefit from China's 4G rollout as they make money from building the networks as well as handsets.

Chinese carriers will be forced to subsidise the handsets to make them appealing to potential subscribers. (Writing by Paul Carsten in BEIJING; Editing by Stephen Coates)