Cheaper chips to drive down Android prices

A wave of cheap chip sets for Android devices could see global markets flooded with Chinese knock offs.

Taiwanese chip shop Mediatek has said it will start churning out low-cost Android capable chip sets in the third quarter of this year which would drive the cost of manufacturing handsets in China even lower. The chip set is by far the most expensive component in the current wave of sophisticated app phones.

China has a long and dubious history of electronics products intended for domestic use being smuggled out of the country and finding their way into western markets, and the fear is that Europe and the Americas will become saturated with grey market imports or convincing copies of handsets designed by established companies.

MediaTek currently dominates the market for mobile phone chips in China and has been investigated in the past after its silicon turned up in cheap imitations of global brands like Apple's iPhone.

Market research outfit iSuppli reckons 172 million knock-off mobiles were made in China last year. It's anyone's guess as to how many of them made it onto the global marketplace.