Out of the total production, about 140 million units were exported, the highest number in the world. Industry experts predict the production capacity was set to rise this year as new producers begin manufacturing.
"There will be 40 more firms to start manufacturing mobile phones this year. The total annual production amount may exceed 500 million units. This is more than 80 per cent of the world's total consumption," Xiao Chang, a senior economist of China Information Industry Association, said.
Since last year, transnational companies have been hiking their investment in China's robust mobile phone industry, building their branches into global supply plants.
Between 1999 and 2004, foreign investors have injected about $3.6 billion into China. They have been establishing technology research centres for mobile telecommunications.
They have also been engaging in the production of parts and accessories, such as integrated circus, LCD screens and Lithium-ion batteries.
Meanwhile, domestic firms have achieved substantial progress in both production and sales. Their market share is now above 50 per cent, the report said.