China-based handset vendor TCL has approached a number of Taiwan-based ODMs for possible cooperation in handset production, according to sources in Taiwan's handset supply chain.

To cope with increasing competition in China's handset market, TCL aims to further diversify its product lines and to deepen its product differentiation to enhance its competitiveness, said the sources.

In addition to Lenovo, Xiaomi Technology, Huawei, ZTE and Coolpad, a number of second-tier handset brands such as Vivo, Oppo, Meizu and LeTV have emerged as new forces in China's smartphone market, making competition even keener, added the sources.

TCL shipped a total of 34.83 million handsets in the first half of 2015, increasing 16% from a year earlier. Of total shipments, smartphones accounted for 60% or 20.88 million units, up 39% on year.

TCL's shipments to Latin America have been strong, while shipments to other markets including North America, Europe have also been growing steadily, noted the sources.

However, Taiwan-based ODMs believe that orders from TCL will not be significant in 2015 given that the China-based vendor is still expanding its own production capacity and that it has already tied up with Compal Electronics for ODM production.

TCL's in-house production capacity is expected to reach 120 million units a year shortly, higher than its goal of shipping over 100 million handsets in 2015, the sources noted.