Entry-level 4G smartphones are gaining traction in the China market and are expected to see increased shipments throughout the second half of 2014, which will subsequently push down the penetration rate of high-end panels used in 4G units.

China's three main telecom operators are now all offering 4G services in addition to various subsidies to push the technology in the market. Handset vendors have since been promoting high-end units in conjunction with the new service, which has helped push the penetration rate for high-end panels used in 4G handset in China.

Heading into the second half of 2014, however, China's handset vendors will focus more on promoting entry-level and mid-range handsets to expand their market share, which will increase demand for FWVGA (854 by 480) and qHD (960 by 540) panels, according to industry sources.

Many of the 4G handsets sold in China during the first quarter of 2014 were priced CNY1,200 (US$195) and came equipped with HD panels, but vendors pushed CNY900 units in the second quarter. The sources said many China vendors will release 4G smartphones priced within the CNY600 range during the second half.

Additionally, China-based research firm Sigmaintell indicated that the proportion of 4G handsets released in China equipped with FWVGA or qHD technology reached 34.7% in June 2014. An additional 30.3% came equipped with HD panels and 5-inch screens, the firm added.

Such percentages are expected to remain steady into the third and fourth quarters of 2014, with entry-level panels likely to see increased proportions. Panel makers as a result will still see lower-than-expected orders for Full HD and WQHD (2560 by 1440) handset panels, the sources added.

Digitimes Research meanwhile added that 4G handset panel demand helped spur shipment growth for Taiwan-based makers in the second quarter of 2014, leading to a near 18% increase in handset panel shipments to represent a 75.3% share of the makers' overall small- to medium-size panel shipments during the quarter, up 0.7pp on quarter.