China makers are continuing to slash pricing for camera modules used in smartphones, with pricing expected to drop as much as 15-20% on year during the second half of 2014.
Demand for the modules has slowed down in China following less-than-expected handset orders from local vendors in China coupled with a surge in popularity for new iPhone 6 products that have camera modules supplied from a limited amount of makers.
Camera module orders to China makers have been lagging as a result and the makers are now slashing pricing for their technology in order to attract customers, which is expected to last throughout 2015. Many makers believe the price declines will intensify even more as the average selling price (ASP) for smartphones is expected to decline by US$50 in 2015.
Taiwan makers meanwhile are having to cut costs drastically and find lower-priced solutions to compete in addition to creating more customized products. The Lite-On group is one example that has taken such measures and it has also reported that its utilizations reached only 80-90% as a result.
Additionally, the Taiwan makers are not expanding production to the extent China makers such as O Film and Truly Optoelectronics have undertaken recently, which has allowed China makers to further enter the supply chains of Samsung Electronics, Lenovo and Xiaomi.
Makers from Taiwan and China also noted they expect to see an oversupply for the modules throughout the end of 2014.