IC demand from China's smartphone market is showing signs of a pick-up, as inventories at non-Apple vendors ease, according to sources at Taiwan-based IC design houses.
Strong sales of Apple's iPhone 6 devices in China resulted in excess inventory levels at other mobile device brands in the fourth quarter of 2014, the sources said. However, inventory digestion is near its end, the sources observed.
Meanwhile, downstream clients have stepped up chip orders prior to China's Labor Day holiday, the sources noted. Rollouts of new smartphones and other mobile devices are also expected to stimulate demand, the sources said.
Many Taiwan-based IC design houses are expected to see their sales rebound starting March, the sources indicated. MediaTek, for example, will see its March revenues rebound to previous high levels.
Nevertheless, MediaTek will report weaker-than-expected performance in the second quarter, if the company fails to generate revenue growth of more than 20% sequentially in the quarter, the sources said. Such a scenario also implies that overall smartphone demand from China and emerging markets is poor, the sources noted.
MediaTek has estimated revenues for the first quarter of 2015 will register a 10-18% sequential decline. The company has not given its sales guidance for the second quarter.
