Prices for handset peripheral chips have started to fall, squeezing further profits generated from phones, according to industry sources.
Peripheral ICs for handsets include power management ICs, radio-frequency (RF) chips, modem chips, power amplifiers, wireless connectivity chips, touchscreen controllers, LCD driver ICs and fingerprint sensors, and other necessary analog chips.
Suppliers of handset peripheral ICs are all facing pressure to lower prices, and have their gross margins come under downward pressure, said the sources. Like PCs, phones are unlikely to bring in significant profits for these firms, the sources indicated.
Handset processor vendors have also seen their gross margins coming under downward pressure as they are engaged in a fierce price war. MediaTek, for example, saw its gross margin fall 10.7pp from a year earlier to 35.2% in the second quarter of 2016.
Airoha Technology, a MediaTek affiliate specializing in RF chips, has reported net profits for the first half of 2016 declined 65% on year to NT$84.87 million (US$2.67 million). Gross margin fell 8pp from a year ago to 23.9% during the same period.
In other news, Airoha's board of directors has decided to suspend the company's plans to apply for listing on the Taiwan Stock Exchange (TSE), after the company posted disappointing results for the first half of 2016.
