Demand for smartphones remains upbeat, but that for entry-level and mid-range mobile phones has turned weak since December 2010, according to industry sources. Several Taiwan-based IC design houses, which focus on the market for low-cost handsets, reportedly have projected less-ambitious shipment and revenue goals for the first quarter of 2011.

The sources revealed that brand vendors and channel distributors have recently given more emphasis on launching new smartphones and higher-end devices for the upcoming first quarter, and therefore decreased orders for entry-level and mid-range products. Major solution providers such as Qualcomm will enjoy brisk demand for high-end handsets and smartphones, but declining interest in more price-friendly devices may put Taiwan-based players at a disadvantage.

In addition, falling handset ASPs are pressuring some Taiwan-based IC designers to lower their quotes further, the sources indicated. MediaTek is likely to launch a fresh price reduction sometime in the first quarter of 2011, the sources said.

MediaTek previously cut its prices in early October following a 10% downward adjustment for the third quarter, the sources added.

The sources estimated MediaTek will see December revenues bounce back, but with limited sequential growth. Meanwhile, both Sitronix Technology and Orise Technology may post on-month revenue drops in December, the sources said.