Global handset shipments grew nearly 5 percent in the second quarter, the first quarter- on-quarter growth in 9 months, marking a reversal of course for the struggling market, researchers at iSuppli said on Friday.

Worldwide shipments of cellphones rose 4.7 percent to 265 million units in the second quarter compared with the first quarter, helped by strength in the Middle East and Latin America, but were still down 15.1 percent compared with a year ago, according to preliminary data from iSuppli.

The market is approaching the bottom, iSuppli analyst Tina Teng said. In the handset market we are seeing more orders coming in and the top 5 OEMs are projecting positive growth.

Inventory levels have decreased and factories are seeing higher utilization rates, she added.

Shipments for 2009 are still expected to shrink 9.9 percent year-on-year to 1.1 billion units -- their first annual decline in eight years.

But iSuppli forecast an improving second half, with quarter-on-quarter increases in shipments of 6 percent in the third quarter and 8.3 percent in the fourth quarter.

THE TOP PLAYERS

Nokia Oyj maintained its top-ranked position, but shipments totaling 103.2 million units slid 15.4 percent from a year ago, due to increased smartphone competition from Samsung, Research in Motion Ltd and Apple Inc.

The strongest year-on-year performance came from second- ranked Samsung Electronics Co Ltd, which recently updated its product line and saw a 14.4 percent increase in shipments to 52.3 million units.

There are two areas that are growing right now, smart phones and ultra low-cost handsets for emerging markets, Teng said.

Third-ranked LG Electronics Inc, which saw growth in the Middle East and Africa and success in the touchscreen market, saw shipments increase 7.6 percent to 29.8 million units. The South Korean handset maker moved up one spot in the ranking.

Motorola Inc and Sony Ericsson -- ranked four and five, respectively -- struggled in the second quarter.

Motorola saw second quarter shipments fall by nearly half to 14.8 million units.

Sony Ericsson, which has yet to gain traction with low-cost handsets, saw shipments decline 43.4 percent to 13.8 million units.

(Reporting by Clare Baldwin; editing by Gary Hill and Andre Grenon)

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