Prices of camera modules used in smartphones are expected to decline by 15-20 per cent in Q4 and will face further price pressure next year as the average smartphone selling price is forecast to drop by $50.

China-based manufacturers are reacting to lower than expected demand from local handset makers and have cut prices to attract customers, DigiTimes said. The slowdown in demand is forecast to carry on throughout next year.

The soft demand is also attributed to the recent release of the iPhone 6 models, which have camera modules supplied from a limited number of manufacturers.

The news site reported that Taiwan makers are being focused to reduce costs, find lower-priced materials as well as create more customised products to compete.

DigiTimes noted that Taiwan makers have not expanded their production capacities as much as China makers’ have, which has created an oversupply of the modules.