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Chip orders for entry-level smartphones decline

Chip orders for entry-level 4G phones and 3G devices have been falling recently, according to industry sources.

Despite continued growth in chip orders for mid-range and high-end smartphones, orders for entry-level 4G phones and 3G devices is slowing down rapidly, said the sources. Inventories of related chips have increased to an excessive level already, the sources indicated.

The slowdown in chip orders for entry-level devices is being caused by a strengthening US dollar and falling demand in emerging markets, the sources said.

Sources at Taiwan-based LCD driver IC firms indicated orders for entry-level phones continue to drop. Customers based in South America, the Middle East, Eastern Europe, Southeast Asia and Africa have all slowed down their pace of orders, according to the sources.

Other handset related chip firms agreed that the visibility of orders for the fourth quarter is falling, but the scenario is "within expectations" and will have limited impact on sales for the rest of the year.

In addition, chip firms have seen their customers in China and other emerging markets pursue higher product ASPs and gross margins. Industry sources generally believe that the 3G phone and entry-level 4G handset market scale will shrink further in 2017.