Supply chain
Digitimes Research: Technology remains key to MediaTek growth
Eric Lin, DIGITIMES Research, Taipei

MediaTek should remain focused on enhancing its technology to better compete against rivals including Qualcomm, Spreadtrum and HiSilicon, and to explore new growth opportunities outside the China market, according to Digitimes Research.

Becoming a technology leader in the competitive mobile-processor market could be difficult for MediaTek to achieve, but should be considered as an ultimate goal for the Taiwan-based company seeking its long-term growth, Digitimes Research said.

MediaTek with its complete turnkey solutions and cost advantage has been successful in partnering with China-based handset makers. Nevertheless, the Taiwan-based firm is facing a growing threat from competitors particularly China-based players including Spreadtrum and HiSilicon, which have become more able to provide competitive turnkey solutions in the entry-level and mid-range segments, Digitimes Research indicated.

While losing its advantage over its China-based rivals in the low- to mid-range segments, MediaTek is still facing strong competitiveness from Qualcomm in the high-end sector, Digitimes Research said. Qualcomm's new Snapdragon 820 has received positive feedback, and already attracted orders from Samsung, HTC, LG, Sony Mobile and Xiaomi.

Despite the company's increased focus on high-end chips, low- and mid-range offerings still account for the majority of MediaTek's total mobile chip shipments, Digitimes Research noted. MediaTek's gross margin remains under downward pressure despite revenue growth. In other words, lowering prices to expand shipments and market share would not drive long-term growth.

Besides, China continues to be MediaTek's biggest market. MediaTek is looking to expand its non-China-based customer portfolio, but efforts appear to have had only limited success, Digitimes Research observed.

In addition, new orders from Samsung Electronics are unlikely to make a positive contribution to MediaTek's long-term business growth, Digitimes Research noted. MediaTek has reportedly shifted part of its processor orders to Samsung's foundry business in order to gain chipset orders for Samsung's mobile devices. Such a business model could bring more risks and uncertainty, Digitimes Research said.

Content from this article was part of a complete Digitimes Research Chinese-language report that has not yet been translated into English. If you are interested in an English version of the report or wish to receive more information about the report, click here to contact us and we will get back to you as soon as possible. Digitimes Research also provides quarterly tracking services for market sectors such as China Smartphone, China Smartphone AP, Taiwan ICT and Taiwan FPD. Click here for more information about Digitimes Research Tracking services.

Realtime news
© 2020 DIGITIMES Inc. All rights reserved.
Please do not republish, publicly broadcast or publicly transmit content from this website without written permission from DIGITIMES Inc. Please contact us if you have any questions.