MediaTek Faces Eroded Smartphone Growth
TAIPEI — MediaTek’s rapid growth in 4G smartphones is likely to be undermined by handset makers in China who are designing their own chips, according to an analyst who covers the tech industry in Asia.Emerging markets such as India, Brazil and Indonesia that are expected to lead smartphone growth in coming years are mainly buying phones based on 3G and even 2G technology.
While MediaTek, the world’s third-largest chip designer, enjoys a market share of about 50% in 3G smartphones, Chinese rivals such as Spreadtrum Communications and Huawei are eroding that position on strong price competition, according to Mark Li, a senior analyst with Bernstein in Hong Kong.“As the competitive intensity from Spreadtrum is unlikely to ease soon, we see further pressure in MediaTek’s 3G market share,” Li said in an August 12 report. “Spreadtrum has collected its toll on 3G and maybe on 4G later.”In addition to Spreadtrum, which sells chips on the merchant market, Xiaomi, China’s largest smartphone maker, is hoping to design its own chips instead of buying them from MediaTek.“The maturation of smartphones is favoring Chinese players, especially when the government happily funds their profitless expansion,” Li said. “Qualcomm is the first one to fall, and MediaTek unfortunately can’t escape the trend either.”