Samsung and Qualcomm's joint price war is not only strangling the high-end dream of Taiwan's chip industry

The first half of 2017 has become a watershed for the mobile phone chip industry. Some are on a roll, while others are at the bottom.

Qualcomm Snapdragon 835, with the support of Samsung S8 and Xiaomi 6, has a comprehensive layout in the mid-to-high-end market and firmly controls it; HiSilicon Kirin 960 is installed in the annual flagship Huawei P10, which can also be regarded as a local leader. With the severance of ties between OPPO and VIVO, the only major manufacturer with a little reputation around MediaTek (MTK) is the not-so-loyal Meizu - if there is any other way, Meizu will most likely not use MTK again.

MTK has to blame its Taiwanese teammate TSMC for this predicament. Due to the poor process technology, MTK's high-end chip Helio X30 will be delayed for at least three months before it can be shipped. In other words, if we want to see mobile phones equipped with this processor on the market in large quantities, we will have to wait until the second half of this year.

In the mobile phone industry, where the hot selling period of a product is only six months, MTK has actually lagged behind its competitors by a whole generation. This is the prelude to being beaten.

MTK had a very difficult 2017

MTK has always had a high-end dream. It first tried to impact the high-end market with the octa-core processor MT6592, but it failed before it could achieve its goal. Then, the X10, X20 and X25 processors were born one after another. They all looked very brave, but ended up stepping on landmines one after another, and never escaped the cognitive circle of being dedicated to thousand-yuan phones.

This is not the users' fault. Whether a product is high-end or not cannot be judged by its appearance. The quality of the chip can only be judged by its performance. With poor performance and poor performance scores, MTK is indeed not high-end.

Therefore, as MTK's secret weapon in 2017, Helio X30 is armed to the teeth. Different from the previous core stacks (if one core is in trouble, seven cores will be watched), Helio X30 adopts TSMC's latest 10nm process, the most efficient architecture, the most advanced process, and even the shortcomings of GPU are made up, which shows full sincerity on paper.

Unfortunately, MTK was ambitious, but TSMC was not supportive. At the end of 2016, TSMC's production capacity declined, and the yield rate of the 10nm process was insufficient, so the products could not be shipped in time. Poor MTK, just when it was about to pick up its gun and fight again, the blue pill could not be found.

In the first quarter of this year, MTK's smartphone chip sales were less than 100 million, and its major customers, such as Xiaomi, OPPO, and vivo, gradually shifted their mobile phone chip orders to Qualcomm. According to Digitimes data, in the first half of 2017, Qualcomm's market share in China will increase to more than 30%, while MTK's will fall below 40%.

Good fortune never comes alone, and misfortune never comes alone

The high-end market is out of reach, and the mid- and low-end markets have also been swept away by Qualcomm's 6-series processors. Previously, MediaTek wanted to compete with Qualcomm through the X30, but the number of high-end customers has dropped sharply. Now, only Meizu is reluctant to give up.

Just when MediaTek had not yet emerged from its predicament, another sad news came.

Recently, Taiwanese media reported that since Qualcomm Snapdragon 835 chip uses Samsung's 10nm technology, the two parties agreed in their cooperation that they would each sacrifice 50% of their profits and sell Snapdragon 835 chips at a low price, in order to suppress the upcoming MediaTek Helio X30 through a price war.

This will undoubtedly tighten the noose around MediaTek's neck. Qualcomm Snapdragon 835 can be sold for around US$70 for major customers in the second quarter, while the current unit price of Helio X30 is around US$60.

In the case that the gap is not obvious, Qualcomm's quotation will put great pressure on MediaTek, which will also lead to fewer and fewer customers interested in using MediaTek's Helio X30 chip. It is estimated that MediaTek's mobile phone chip shipments will decline by 10 to 15% this year.

Seeking transformation may be the way out for MediaTek

Transformation may be something that MediaTek must consider now. The automotive chip market has broad prospects. Qualcomm announced in 2016 that it would buy the automotive electronics giant NXP for $47 billion, and announced its ambitious entry into the automotive chip market. As a chip manufacturer, MediaTek is able to find enough opportunities in this field with its strength.

In any case, 2017 is an extremely important year for MediaTek, which is responsible for not only making a difference in the high-end market, but also ensuring that it does not lose market share in China.

But the current situation is that it is not only consumers who have become rational, but also Chinese manufacturers. For them, MediaTek's advantage no longer exists. As the market changes, going high-end is not just about shouting slogans. In addition to high configuration, it also requires high prices and high profits.

After all, the formula of MediaTek + young idol + Hunan TV = No. 1 sales in China no longer exists. No matter how close the relationship between MediaTek and OPPO and vivo was before, business is business after all.

Talking about feelings costs money.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.