Xiaomi in addition to various other handset vendors in China will increase purchases of high-end smartphone panels from Sharp. The orders are set to be used in units released as early as first-quarter 2015.

Sharp is reportedly seeing a surge of new panel orders from Xiaomi in addition to a variety of shipment prospects to other China vendors through the end of 2014 into 2015 as the vendors prepare to release new smartphones.

Japan Display and LG Display are also reportedly aiming to secure similar orders and further enter the supply chains of China handset vendors looking to release high-end smartphones in 2015, which according to industry sources, is causing price competition to increase in the high-end panel segment.

China-based handset vendors are reportedly showing interest in Full HD in addition to 5.46- and 5.98-inch 2560 by 1440 resolution panels, the sources said, adding that Japan- and Korea-based makers are vendors current top picks due to their technology advantages.

The vendors are attempting to make more vertically integrated supply chains with makers in China. However, local panel makers primarily produce HD handset panels at present and are slowly expanding production capacity as well as increasing technology for higher-end panels.

Meanwhile, as Korea- and Japan-based makers compete among themselves, Taiwan makers are starting to feel more pressure as they are suffering from price competition in the entry-level handset panel segment while acting conservative about capacity expansion for higher-end technologies.

In 2015, China vendors aim to release high-end units to compete with international vendors but with the intention of pricing approximately half of units from vendors such as Apple and Samsung Electronics. The trend will reflect what market observers refer to as a "high-specification/low-priced" strategy from China vendors in 2015.

The sources also noted that China's telecom providers are also in discussions over new subsidies set to be issued in 2015 in order to spur handset growth, with an emphasis on 4G units.