Nov. 17 (Bloomberg) -- Verizon Wireless and Sprint Corp., two of the three largest U.S. mobile-phone operators, said they're in talks to buy handsets from Chinese producers and suggested China's influence in the industry is growing.

Sprint may pick at least one Chinese supplier within three months and is in talks with four to five others in the country, Stephen Falk, vice president of global development, said in an interview in Hong Kong. Verizon is also in talks with Chinese manufacturers, said Gerard Flynn, a director at the New Jersey- based company. Neither official named the potential suppliers.

``Chinese vendors will be increasingly competitive and I think they will have an impact in driving down the cost,'' said Falk. ``We may not be ordering them until the fourth quarter but I think we're within three or four months'' of a decision.

Ningbo Bird Co., China's largest handset maker, and local rivals plan to boost exports as the country's consumers turn to phones with cameras and other features offered by foreign manufacturers, including Finland's Nokia Oyj and Motorola Inc.

Sprint, based in Overland Park, Kansas, is in talks to buy phones from China that offer fewer features than the latest handsets from companies such as South Korea's Samsung Electronics Co., said Falk, who is in Hong Kong for the 3G World Congress & Exhibition conference.

Portfolio

``To complete our portfolio, we need attractive low-end devices,'' Falk said. `We had a delegation here a few months ago in China looking at four or five different manufacturers, and we haven't drawn any conclusions but I think it's fair to say they got our attention.''

Handsets offered to customers by Sprint include phones from Samsung Electronics and Osaka, Japan-based Sanyo Electric Co. Verizon also offers products made by Seoul, South Korea-based LG Electronics Inc. and Japan's Kyocera Corp.

Sprint had never ordered phones from a Chinese manufacturer, Lisa Burton, a manager of global development at the company, said in Hong Kong.

Sprint, which is also the third-largest U.S. long-distance carrier, posted a third-quarter loss of $1.9 billion after writing down the value of its telephone network. Chief Executive Gary Forsee has said he wants to cut $1 billion from annual costs by 2006.

Simon Leung, a senior vice president at Schaumburg, Illinois-based Motorola, the world's second-largest handset maker after Nokia, said he wasn't surprised that U.S. operators were talking with Chinese manufacturers.

The Chinese handset-makers ``must be doing something right,'' Leung said in Hong Kong.

More Successful

As vendors learn to produce phones faster, ``the Chinese manufacturers are going to be much more successful in all the ranges, not just the low-end,'' Verizon's Flynn said.

``The reason that I'm here is that China is a critical part of the future of wireless,'' said Flynn, who was also attending the 3G conference in Hong Kong. ``They will be a major source of wireless technology.''

Aside from what may be its first purchase from a Chinese handset maker, Verizon is in talks with the country's manufacturers, including Huawei Technologies Co., about buying phone equipment, Flynn said.

Inventories

Handset inventories in China rose to more than 30 million mobile sets by the middle of the third quarter, according to research company Isuppli Corp. China, the world's biggest mobile- phone market by users, had 315.1 million users as at the end of August.

Ningo Bird, based in Fenghua, Zhejiang province, last month said third-quarter profit fell 2.7 percent to 58.8 million yuan ($7.1 million) after it cut prices on increased competition.

The company made about 2 percent of China's exports of handsets based on global system for mobile communications, or GSM, technology, in the first five months this year, according to Xinhua news agency, citing the General Administration of Customs. Foreign makers such as Motorola, Germany's Siemens AG and Nokia accounted for a combined 67 percent of the exports.

Verizon Wireless, the No. 2 U.S. mobile-phone operator after Cingular Wireless LLC, is a venture between Newbury, England-based Vodafone Group Plc and New York-based Verizon Communications Inc.

To contact the reporter on this story: Young-Sam Cho in Hong Kong at ycho2@bloomberg.net

Last Updated: November 17, 2004 00:14 EST