Handset supply chain makers are continuing to see the effects of lagging 4G handset sales in China as vendors clear out reserves of 3G units.

Both vendors and retailers in China are still clearing reserves of 3G handsets as sales have been stagnating following decisions by major China-based telecom providers to end handset purchase subsidies.

The subsidies spurred a wave of handset purchasing throughout 2013 into 2014 and were expected to continue for 4G units. However, most telecom providers have limited or even stopped such moves and have yet to reissue new plans for helping to push 4G handsets in China.

Panel makers and touch panel makers have seen the brunt of the situation in 2014 and expect conservative orders to China during the fourth quarter of 2014 as a result.

China-based handset vendors meanwhile are now reportedly developing more online promotional and sales events that will speed up 4G handset growth but are still conservative about 4G handset sales in the fourth quarter.

High specification, low-priced handsets will still be the focus for China's handset vendors through the end of 2014, noted supply chain makers.