ZTE, which is also the fifth-ranked telecommunications gear maker globally, said it aimed to ship 40 million smartphones this year, up from 15 million in 2011, and expected to sell about 1 million tablet computers, more than double the 2011 figure.

Of the 40 million smartphones, more than half would be sold in China, the company said.

"Our smartphones are selling quite well in certain mature markets such as Japan, the U.S., Europe, Australia and in certain emerging countries," Senior Vice President Zhang Renjun told Reuters on the sidelines of a company event.

The company's target of 40 million smartphones is higher than an estimate of 30 million it provided to analysts last week after it announced its earnings.

ZTE posted an 85 percent drop in second-quarter profit, as its margins were squeezed by sluggish equipment sales and fierce competition in handsets.

The Shenzhen-based company, which launched its first basic mobile phone in Africa little more than 10 years ago, said in April it could be shipping 100 million smartphones a year by 2015.

ZTE, with phone models such as Blade, Skate, Era and Windows-based Tania, has diversified into consumer gadgets, selling dongles, smartphones and tablets.

In February, it launched its first tablet in the United States with partner Sprint Nextel.

The Android-based Optik tablet, which has a unique rubberized grip to stop it slipping, can be bought for $100 with a contract and $350 without, making it far cheaper than the latest iPad, which costs at least $499.

ZTE's shares were down more than 1 percent in Hong Kong on Tuesday, lagging a flat overall market.

(Reporting By Lee Chyen Yee; Writing by Anne Marie Roantree; Editing by Richard Pullin)

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