This research aims to study the business strategies of mobile phone industry by analyzing the industry’s positioning among industries in Taiwan and the industry’s production volume as well as its dynamics. The research objectives are to investigate the R&D techniques and production management capabilities of Taiwanese mobile phone industry, to examine the strategies of production, distribution, R&D, design and development of the mobile phone manufacturers and coopetition relationship between suppliers and customers in Taiwan. It is hoped that the findings of the research will be helpful to the strategy formulation of mobile phone industry in Taiwan. Due to the difficulty in data collection, this research applied both data analysis and case study for examination. The case study was used to conduct exploratory research. The industrial and environmental analyses were adopted to identify the strengths and weaknesses of Taiwanese mobile phone industry. The selection and distribution of industrial values were also examined in order to figure out the positioning of the business strategies in the mobile phone industry in Taiwan. The research concluded with the future direction for mobile phone manufacturers in terms of the consolidation of industrial values, enhancement of organizational management and competitive dynamics. The research found that the Taiwanese mobile phone manufacturers have transformed from offering the pure OEM to engaging in development, design and branding. The mobile phone industry adopted the complete supply chain system of the personal computer industry to expand the business horizon with its ODM and OBM capabilities. The business strategy now should be committed to quickly enhance the R&D and design capabilities to move from the assembly service of the midstream and downstream to the chip development of the upstream to step forward to IP R&D and manufacturing stages and to direct the future development towards the upper two ends of the “Smiling Curve.” In the face of the quickly growing Chinese market and rising mainland Chinese mobile phone competitors,Taiwanese mobile phone manufacturers should work with the emerging equipment manufacturers of the third generation mobile telecommunication on the mainland to create a win-win situation for the both sides through coopetition.