Prices for 8-core handset chips are set to fall below US$10 in 2015 while those for quad-core chips will slip to US$5, as chipmakers start a price war, according to industry sources in China.

A price war has been triggered by Qualcomm, compelling rival Spreadtrum Communications to follow suit, said the sources. MediaTek has also decided to cut its prices starting the second quarter, the sources indicated.

Upstream foundry service providers are offering cheaper quotes in order to boost their production utilization rates, the sources observed. Handset demand in China and other emerging markets has been weaker-than-expected thus far in the second quarter of 2015, the sources said.

ASPs for handset chips are likely to fall more than 30% in 2015, the sources estimated. With the chip prices going down, makers' gross margin and profitability will face downward pressure, the sources suggested.