The joint venture, announced Monday, will be majority-owned by TCL, which has an option in about five years to buy Alcatel's 45 percent share.
For the last year, Alcatelto unload its cell phone making business, which consists of researching and developing handsets, then ordering them in bulk from different manufacturers. The joint venture allows the company to focus on its core business of making landline telephone network equipment.
Alcatel and TCL combined sold 17.5 million phones last year, making the joint venture the world's seventh largest, Alcatel said. A company representative said the companies expect the joint venture to climb the market rankings quickly as it enters lucrative markets in North America and Europe, where the two companies individually have been weak.
"During the first year of the joint venture, we hope to be among the five top players in the world," edging out other major players, including Sony Ericsson and LG, the Alcatel representative said.
But analysts expressed doubts that the venture, which isn't expected to be running until this summer, will have the time or the manufacturing base to produce enough phones to move that quickly in the market.
Representatives of LG, Siemens and Sony Ericsson did not immediately respond to calls seeking comment.