Why is MediaTek, which was so powerful last year, losing ground now?

MediaTek's performance last year was impressive. Driven by OPPO and vivo, the two fastest-growing mobile phone brands in China, MediaTek set new highs in revenue and market share. In the second quarter of last year, it surpassed Qualcomm in the Chinese mobile phone chip market for the first time. However, its shipments have since shown signs of stagnation. Recent analysis indicates that MediaTek's market share may decline to a certain extent this year.

The peak fell due to lack of technical strength and strategic errors

MediaTek's market share hit a new high last year due to the large-scale adoption of low-end chips by OPPO and vivo. OPPO and vivo doubled their shipments last year, ranking first and third in the domestic market share, and many of the two mobile phone companies' best-selling mobile phones generally use MediaTek's MT7675X mid-range chip.

However, in the late third quarter, as China Mobile required mobile phone companies to support LTE Cat7 technology, China Mobile, which holds about 60% of the Chinese mobile phone market, has a significant influence on the market, and MediaTek did not have chips that could support this technology before the launch of helio X30 and helio P35, OPPO and vivo turned to Qualcomm and adopted Qualcomm's Snapdragon 625 or Snapdragon 65X series chips. Another factor is that after OPPO and vivo's domestic market share has been rising steadily, they began to enter the overseas market, but they just lack patents and need to rely on Qualcomm's patent reverse licensing to obtain patent protection. They reached a patent licensing agreement with Qualcomm in August and September last year, which also became one of the reasons why they gave up MediaTek chips.

MediaTek is determined to use TSMC's latest 10nm process, hoping to gain performance and power consumption advantages by using the most advanced process in its high-end chip Helio X30 and mid-range chip Helio P35. This is obviously a major mistake. TSMC originally expected to put the 10nm process into production at the end of last year. If so, Helio X30 should be available in January this year. However, TSMC's 10nm process encountered a low yield problem when it was put into production at the beginning of this year. At the same time, in order to ensure that Apple's A10X processor can be launched on time, it will give priority to using the 10nm process capacity for the production of A10X processors.

Yesterday, Apple released the iPad. Surprisingly, the iPad Pro with A10X processor was not included. Instead, Apple released an iPad with A9 processor. Does this mean that TSMC's 10nm process yield is still too low, delaying the launch of A10X processor? If so, this is certainly not good news for MediaTek, and the large-scale launch of its X30 and P35 will only be delayed again.

Qualcomm's differentiation strategy works

Under the pressure of MediaTek, Qualcomm's independent architecture research and development could not keep up. In early 2015, it launched a Snapdragon 810 chip developed with ARM's public version core A57 and A53. However, due to heating problems, its high-end chips plummeted by 60%. At the end of 2015, Qualcomm launched a new high-end chip Snapdragon 820, returning to its own architecture. Snapdragon 820 has powerful single-core performance, GPU and baseband technology also have leading advantages. In particular, Qualcomm's baseband technology is still the world's number one so far. It took the lead in developing basebands that support 1Gbps and 1.2Gbps. It is also the world's first chip company to launch a baseband that supports 5G technology. The Snapdragon 835 released at the beginning of this year is the world's first mobile phone chip that supports 1Gbps.

Qualcomm continues to use ARM's public version high-performance core to develop mobile phone chips. It changed the name of the chips using ARM's public version high-performance core A72 from Snapdragon 618 and Snapdragon 620 to Snapdragon 650 and Snapdragon 652, and the chip using ARM's public version low-performance core A53 was named Snapdragon 625. The mid-to-high-end chip Snapdragon 65X is benchmarked against MediaTek's high-end chips, while Snapdragon 625 is benchmarked against MediaTek's mid-range chips.

Judging from the market reaction, Qualcomm's strategy has paid off. Snapdragon 65X and Snapdragon 625 are very popular among Chinese mobile phone companies. Vivo, which drove a sharp increase in MediaTek's chip shipments last year, mainly uses Qualcomm's mid-to-high-end chip Snapdragon 65X, while OPPO's successor to last year's hot-selling R9 uses the mid-range chip Snapdragon 625.

After achieving such results, Qualcomm will launch the successor of Snapdragon 625, Snapdragon 635 this year; it is worth noting that the successor of Snapdragon 65X, Snapdragon 660, has the same quad-core A73 + quad-core A53 architecture as Snapdragon 653, but the process has been greatly improved. Snapdragon 65X has always used TSMC's 28nm process, resulting in high power consumption and heating problems when running large applications such as games. Snapdragon 660 will use Samsung's 14nm FinFET process, so it will perform better in terms of power consumption and performance.

This year, Qualcomm will form Snapdragon 835 to focus on the high-end market, Snapdragon 660 and Snapdragon 635 to cover the mid-to-high-end and mid-range markets, and Snapdragon 435 to focus on the low-end market. Recently, it was reported that it will launch Snapdragon 205 to focus on the ultra-low-end market, and its product layout will be more complete.

Under the pressure of Qualcomm, MediaTek's market share may decline this year

Among the world's top six mobile phone companies, Apple has its own mobile phone processor, Samsung and Huawei have their own mobile phone chips, and Xiaomi has recently launched its own mobile phone processor. Under such circumstances, the mobile phone chip companies have been under pressure. In order to gain market share, the competition between Qualcomm and MediaTek, the world's top two mobile phone chip companies, has become increasingly fierce.

MediaTek continues to hope to challenge Qualcomm with multi-core tactics. However, as users become more aware of the industry's understanding of mobile phone performance, they begin to pay more attention to single-core performance. MediaTek's advantage in multi-core is no longer as important as before, and too many processor cores will lead to excessive heat. On the contrary, due to its backwardness in GPU and baseband technology (helio X30 can only support 600Mbps downlink, and GPU performance is estimated to be equivalent to Snapdragon 820), many mobile phone companies are unwilling to use its high-end chips to promote flagship phones.

Qualcomm has been suppressing MediaTek with its complete layout of high, medium and low-end chips, as well as its technological advantages. Recently, news has indicated that its high-end chip Snapdragon 835 is priced at around US$40, which is about one-third lower than the previous high-end chip price of US$60. This also means that it values ​​market share more than before and is willing to lower prices to attract mobile phone companies to adopt its chips.

Qualcomm's patent advantage is another weapon to suppress MediaTek. Meizu, the last Chinese mobile phone company, also reached a patent licensing agreement with Qualcomm at the end of last year, and is expected to launch a number of mobile phones using Qualcomm chips in the third quarter of this year. This means that after a long period of turmoil, Chinese mobile phone companies have finally recognized Qualcomm's patent advantage in the mobile phone market. After they have occupied about 90% of the domestic market share, they hope to use Qualcomm's patent advantage to obtain patent protection for their overseas markets.

As OPPO and vivo switched to Qualcomm chips in the second half of last year, Qualcomm's market share increased significantly compared to 2015. AnTuTu data shows that in 2015, Qualcomm and MediaTek's shares in the Android market were 30.62% and 29.35% respectively, and in 2016 their shares were 57.41% and 20.49% respectively. This year, Qualcomm is expected to gain more market share as it has many advantages. US analyst Jun Zhang is more optimistic about Qualcomm's development this year and believes that it is expected to reach a 65% market share. Naturally, MediaTek's market share will decline to a certain extent.

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.