Chinese chipmakers are engaging in “bloody” competition that could accelerate production of cheap tablets, already one of the fastest-growing areas in the consumer electronics industry.

Designers of the chips used in many of the inexpensive Chinese-made tablets popular in emerging markets have in recent months slashed prices by around 50 per cent, according to analysts.

“The market is forcing all the supply chain to be very cost sensitive,” says Joe Chen, vice-president of greater China for GlobalFoundries, an Abu Dhabi-owned chip manufacturer that recently agreed to start producing chips for Chinese designer Fuzhou Rockchip Electronics. In chips, he says, “it’s a very bloody market, meaning a pricing war”. The tablet makers’ race to undercut competitors and reach a broader group of consumers has led the chip industry into a price war, said Mr Chen.