Taiwan-based IC design houses are expected to see a rebound in chip prices in the second quarter 2011 as clients from the end market have softened their positions in price negotiations while building up their inventories after the Japan earthquake, according to industry sources.
Some end market device vendors have revealed that their supplies of customized chipset solutions offered by Japan-based chipset makers are likely to fall short of demand by 10-20% in the second quarter, and so are willing to place short lead-time orders with Taiwan's IC vendors provided that those ICs are workable without the need to modify the designs of the end market devices.
Taiwan's IC design houses previously have been reluctant to push sales to such highly customized chipset segments dominated by Japan-based IC vendors due to concerns of yield rates, indicated the sources.
But the build-up of inventory by device vendors will eventually result in a shortage for some chipset solutions, said sources, noting that this will help shore up the ASP (average selling price) for chips as well as gross margins for chipmakers.