21st Century Business Herald -- The hottest smartphones in China now, selling at around 1,000 yuan ($157.5), have caught the attention of foreign chip giants.

“We are cooperating with a local company and more players will join in the tide of low-cost smartphones,” Zhang Daijun, director of the China region at Geneva-based ST-Ericsson Inc., told the 21st Century Business Herald.

The company, which supplies wireless platforms and semiconductors to four of the top five mobile handset manufacturers worldwide, is building the first smartphone with Chinese internet giant Shanda Interactive Entertainment Ltd. (NASDAQ:SNDA).

“Growth of smartphones in China can develop much more than it already has,” Leif Johansson, chairman of ST-Ericsson’s co-parent Ericsson AB, said at the beginning of April.

The new phone, scheduled to debut on June 6, will have a 4.3-inch touch screen and retail for around 1,000 yuan. It will run Shanda’s tailored software.

Zhang told the paper that the company will add more Chinese partners to produce smartphones in the 1,000-2,000 yuan price range.

China, which now receives the world’s largest shipments of phones that can access the internet and run applications, is crucial for the company to regain profit and shore up market share.

According to market research company Canalys, global shipments of smartphones advanced 45 percent year-on-year to 146 million units in the first quarter of 2012.

Shipments to China accounted for 22 percent of the global total, helping the world’s most populous nation surpass the U.S. as its largest smartphone market.

From 2010 to 2011, phones sold at 1,000-2,000 yuan had about 50 percent of the market share in China, Zhang said, adding local phone makers have the biggest advantages in this price range.