Taiwan's MediaTek takes biggest slice of China smartphone chip market

27, Jan. 2021

Taiwan's semiconductor producer MediaTek overtook Qualcomm as China’s largest smartphone chip supplier in the second half of 2020 after the U.S barred Huawei, China’s biggest smartphone maker, from buying components from American companies such as Qualcomm.(Photo courtesy of Taiwan’s Central News Agency (CNA) )
Taiwan's semiconductor producer MediaTek overtook Qualcomm as China’s largest smartphone chip supplier in the second half of 2020 after the U.S barred Huawei, China’s biggest smartphone maker, from buying components from American companies such as Qualcomm.(Photo courtesy of Taiwan’s Central News Agency (CNA) )

By Gloria Cho

TAIPEI, NNA—Taiwan’s MediaTek Inc. has soared to top-ranking supplier to China’s smartphone chip market in the second half of 2020, elbowing aside rivals Qualcomm and Huawei which were hit by United States sanctions against the communist giant.

MediaTek's market share of China’s smartphone system on chips (SoC) market jumped to 31.7 percent, almost doubling their 17.4 percent share in the last six months of 2019, when Qualcomm reigned over 37.9 percent of the market, according to a report by CINNO Research.

Huawei’s semiconductor design arm HiSilicon trailed behind MediaTek with a market share of 27.2 percent, dropping 10 percent in the second half of last year, while Qualcomm fell to third spot with 25.4 percent.

MediaTek chips became highly sought-after when the United States barred non-American suppliers across the world from shipping to Huawei if their products contain U.S. technology. Since mid-September last year, the suppliers would need a license from the U.S. Department of Commerce in order to conduct business with the Chinese tech giant.

The ongoing broad U.S. trade war against China also prevents Huawei, China’s biggest smartphone maker, from buying components from American companies such as Qualcomm and Taiwan Semiconductor Manufacturing Co. China’s leading smartphone makers had no choice but to diversify their chip supply chains, a move which benefitted MediaTek.

CINNO Research said in a press release, “Beyond excellent performance of MediaTek’s mid-end platform, it is undeniable that a series of sanctions imposed by the U.S. government has prompted major manufacturers to seek more diversified, stable and reliable sources of supply.”

The ascendancy of MediaTek was also helped by China's acceleration of 5G penetration last year. China was expected to account for nearly 80 percent or 175 million of 220 million global 5G subscriptions by end-2020, according to estimates by Swedish telecom equipment maker Ericsson in a report released in November.

In 2020, the Taiwanese semiconductor producer performed well in the lower-mid to mid-market with its Dimensity 800 and 720 chipsets as their specifications and cost structures were able to meet the demands of the mass Chinese market, Industry Research Institute TrendForce analyst C.Y. Yao told NNA.

Increasing adoption of MediaTek chips in mid-range phones of major players such as Huawei, Oppo, Vivo, and Xiaomi had contributed to a significant growth for MediaTek. Up to 22.6 percent of the four brands’ 5G end-products used MediaTek chips in 2020, according to CINNO Research.

Yao of TrendForce said, “We will not say MediaTek is adopting a ‘mid-priced high-spec’ strategy. But, more objectively, its products happened to fit in with mainstream needs, which is further bolstered by Chinese government’s efforts to accelerate 5G smartphone penetration last year.”

Aiming to stay ahead of competition, MediaTek launched its new Dimensity 1200 and 1100 5G smartphone chipsets last week, boasting unrivaled AI and multimedia for powerful 5G experiences.

“MediaTek continues to expand its 5G portfolio with highly integrated solutions for a range of devices from the high-end to the mid-tier,” said JC Hsu, corporate vice president and general manager of MediaTek’s Wireless Communications Business Unit.

The chipmaker said multiple vendors including Xiaomi, Vivo, Oppo and realme have indicated interest in the new Dimensity chip. The first 5G phones incorporating the new chipsets are expected to hit the market at the end of Q1 and beginning of Q2 this year, it said in a press release.

TrendForce expects the global penetration rate of 5G smartphones to increase from 19 percent in 2020 to 37 percent in 2021. It also foresees chip producers churning out entry-level and mid-range 5G chips to reach a production of about 500 million units this year.

“MediaTek will maintain its momentum on the prospect of smartphone growth this year, if it sticks to the strategy of optimizing chip cost structure,” said Yao.

MediaTek logged accumulative revenue of NT$322.1 billion ($11.5 billion) in 2020, which represented a huge 30.8 percent increase over the previous year.