China's market for MP3 players is growing with a 250-per-cent increase year-on-year in demand for MP3 chips predicted.

Taiwan-based AT Chip Corp's Michael Chang told China Daily: "About 10 million MP3 players are expected to be sold this year in the Chinese mainland."

"With continuous price drops, the mainland's MP3 player market will witness explosive growth," Chang said.

Foxlink (Cheng Uei Precision Industry) and Ji-Haw Industrial, also Taiwan-based, expect rising revenues in the fourth quarter too, according to DigiTimes.

Chang projects annual shipments of MP3 players in the Chinese mainland will reach 20 million units next year, and 50 million units in 2007. By 2008, shipments are expected to hit 70 million units – 70 per cent of the global market.

According to the China Daily report, global shipments of MP3 players are expected reach 50 million next year, up 25 per cent year-on-year. By 2007 global shipments are projected to reach 80 million units.

Chang predicts dramatic price drops due to decreasing costs of chips, and expects this will boost the MP3 player market.

"A chip for MP3 players usually costs $5-10, but it can be even cheaper. When the cost of a chip is lower than $5, the MP3 player market will undergo snowballing growth," he said.