The top-4 China-based branded handset vendors - Huawei Device, ZTE, Lenovo and Coolpad - will continue to develop the CYN1,000 (US$159) smartphone segment in China in 2012 and will prevent their channel operators from engaging in price-cutting competition with white-box vendors, according to industry sources.

More newcomers have entered the smartphone sector in China, propelled by the launch of related reference designs for smartphones by MediaTek, MStar Semiconductor, Qualcomm and Spreadtrum Communications, raising the possibility that prices of the entry-level smartphones may drill downward to a range of CNY400-700 compared to the prevailing prices of around CNY1,000, the sources noted.

Despite increasing pricing competition from white-box handset makers as well as international brands including Nokia and Samsung Electronics, the top-4 local brand vendors are unlikely to lower their prices further until makers in the handset component supply chain are able to reduce their quotes substantially, said the sources.

To maintain competitiveness and brand images, the top-4 vendors are expected to roll out models with higher hardware specifications for the CNY1,000 segment, the sources commented.

Shipments of smartphones in China are expected to grow 40-60% on year in 2012, the sources estimated.