China-based Huawei Device has reduced orders for smartphones to be shipped in the first quarter of 2016 due to high inventory levels, according to sources from supply chain makers.

China-based telecom carrier China Mobile's 4G/3G service subscribers rose significantly by 54.5 million sequentially in the fourth quarter of 2015 as the carrier's promotional activities had encouraged users to upgrade from 2G to 4G. This also boosted demand for mid-range and entry-level 4G smartphones in the fourth quarter.

However, inventory issues remain a problem for some smartphone vendors such as Huawei and upstream component suppliers of these device vendors are expected to be affected.

Currently, Huawei is mainly placing smartphone panel orders with Japan Display for its high-end models, while Samsung Display has also recently entered Huawei's supply chain, supplying AMOLED panels, noted the sources adding that Huawei is expected to use AMOLED panels in many of its high-end smartphones in 2016.