Along with those strong sales, Google's new Android software promises to reshape the licensing landscape on the island.
Taiwanese companies shipped 11.02 million [M] smartphones in the July through September period, up 125 percent compared to the same time last year, and up 54 percent compared to the second quarter, according to Taiwan's Market Intelligence Center, a publicly-funded industry researcher.
The big year-on-year production increase indicates that some hot technology products may be able to weather the global financial crisis. However, the Market Intelligence Center said shipment volumes among less well-known smartphone makers in Taiwan saw significant declines during the quarter due to the challenging economic climate and a lack of unique features.
Apple reported selling 6.89 million iPhones during its fourth quarter, which ended Sep. 27, a figure nearly 1 million units higher than most analysts had predicted. The company also sold 11.05 million iPods, up 8 percent compared to the same time last year.
Smartphones have been a boon to Taiwanese contract manufacturers due to their higher profit margins compared to other products such as desktop PCs and game consoles.
The iPhone 3G helped manufacturer Hon Hai Precision Industry, the world's largest contract electronics product maker, beat analyst estimates when it reported third quarter net profit of NT$17.8 billion (US$542.3 million) last week, on revenue of NT$431.2 billion.
The net profit figure was down a little over 10 percent compared to the same time last year due to slower desktop PC sales, according to Jenny Lai, an analyst at CLSA Asia Pacific Markets in Taipei.
Global desktop PC shipments slumped 6 percent year-on-year in the third quarter, she said, and desktop PCs account for 30 percent to 40 percent of Hon Hai's sales. The company makes PCs on behalf of clients such as Dell and Hewlett-Packard.
Taiwanese phone maker HTC also saw strong shipments of its latest smartphone, the Touch Diamond, continue to strengthen, according to the Market Intelligence Center.
Like the iPhone 3G, the Touch Diamond boasts a large touchscreen face and works on high-speed wireless networks, and uses Microsoft's Windows Mobile OS. HTC is the largest maker of devices that run on Windows Mobile.
HTC did not provide unit shipment figures for the Touch Diamond. But officials did say that while the global credit crunch has impacted consumer sentiment, smartphones appear to be shielded for now because of their growing popularity.
One of HTC's hottest new products this year, the G1, was launched in September. The first-ever smartphone with Google's Android OS, T-Mobile USA, Google and HTC jointly announced the G1 at a ceremony in New York, and set its price about $20 cheaper than the iPhone 3G. HTC had nicknamed the handset "Dream."
The new Android OS is making waves among Taiwanese phone makers. Asustek Computer announced plans to release an Android-based mobile phone early next year, and a few other companies are believed to be working on similar devices.
The entry of Android into the handset market has prompted rival OS makers to lower licensing fees in order to compete, the Market Intelligence Center said. The researcher predicts that people everywhere will benefit by lower prices.
Smartphones aren't the only hot products still selling well, but they do highlight a trend to mobile computing.
Netbooks, another mobile computing device, are also a hot item this year. Last week, Acer said it had shipped 2.4 million Aspire One netbooks in the third quarter, and forecast fourth-quarter shipments would exceed that amount. Asustek Computer shipped 1.7 million of its popular Eee PC in the third quarter, and predicted fourth quarter shipments of between 1.6 million and 1.8 million units.
The mini-laptops, which are light and allow people to access the Internet wirelessly, are becoming popular for their low price and portability.