Chip orders for entry-level smartphone models are dropping

Industry sources say that orders for entry-level 4G and 3G phones are dropping like a lead balloon in emerging markets. As a result, chip orders for these devices are also crashing in the affected regions. Part of the reason for this is the aforementioned shrinking demand for these models. Additionally, the strengthening U.S. Dollar has forced prices of entry-level phones to rise in these markets.

According to these sources, companies producing cheaper handsets are looking to raise their average selling price which in turn would raise their margins. Analysts expect to see more declines in market share for these low-end 4G and 3G models next year. And the focus on more profitable phones could mean a shift in production to more mid-range and high-end models.

Orders for integrated circuits by customers in South America, Eastern Europe, Southeast Asia, Africa and the Middle East are on the decline. Other chip makers for entry level models agree that the order book for what's left of the fourth quarter is declining. Still, there are only three weeks left in the quarter and the year, which means that the decline in orders will probably not lead to a huge decline in entry-level phone production for the rest of 2016.

source: Digitimes