MediaTek Overtakes Qualcomm as Top Chip Supplier – Better does not always win!
08-01-2021 | By Robin Mitchell
MediaTek and Qualcomm are giants in the mobile industry, but MediaTek has recently surpassed Qualcomm in Q3 of 2020. Why has Qualcomm been in the news recently, what products have MediaTek been developing, and why has Qualcomm fallen behind?
MediaTek Surpasses Qualcomm
MediaTek and Qualcomm are two names that most engineers are aware of, and even many consumers are aware of both tech giants. Whether it is a Wi-Fi controller or a 5G chipset, both companies are heavily involved in the mobile and internet industry.
Qualcomm, an American company, has traditionally been one of the world’s leaders in mobile technology. Still, the Taiwanese company MediaTek has just overtaken Qualcomm to become the world’s biggest smartphone chips supplier. Qualcomm currently provides approximately 29% of the global market share, but MediaTek has just announced its market share of 31%, putting them two points above Qualcomm.
Despite Qualcomm falling behind in the smartphone sector, they are still the world leader in 5G chipsets, providing 39% of global devices. According to Counterpoint, the growth in MediaTek results from increased sales in countries such as China and India, whose markets are more sensitive to price. Furthermore, MediaTek being a Taiwanese company, faces fewer restrictions when selling to China. In contrast, Qualcomm may be subject to special licenses and taxes due to tensions between China and the US.
Is it really all about market access?
MediaTek products are generally cheaper when compared to their Qualcomm counterparts means that they will undoubtedly be more popular in developing nations. However, companies like MediaTek could become popular in developed nations such as the US and UK for only recently materialised reasons.
To start, the COVID-19 pandemic has seen widespread job losses and the closure of companies. The resulting high rates of unemployment will see customers low on funds and may decide to opt for cheaper options when decided to get a phone upgrade. If MediaTek savings can carry onto developed markets, then these users would be able to make savings on their devices and thus increase the popularity of MediaTek.
Another reason which may see the gradual increase of MediaTek parts in developed nations comes from the royalties by Qualcomm. Qualcomm is not just known for its development of chipsMediaTek's and devices key developers of mobile technologies such as 4G and 5G.
Despite mobile standards being agreed upon by a wide range of developers, Qualcomm always seems to be able to get their patented technology into the standards. The result of this is that any device that wishes to implement such technologies is subject to Qualcomm patents. Therefore, Qualcomm charges customers for their devices and then a royalty to use that device. This has historically upset many businesses, but now the automotive industry is feeling the effects after they tried to integrate mobile features into vehicles only to find out that Qualcomm was expecting a royalty.
MediaTek develops mobile chipsets and is also subjected to the same royalties. However, MediaTek negotiated a deal with Qualcomm more than 7 years ago, whereby they do not have to disclose the number of devices sold. Furthermore, devices that utilise ARM can avoid Qualcomm licensing, and MediaTek has shifted towards ARM technology such as the development of the Dimensity 700.
Will business move away from Qualcomm?
It is not clear if MediaTek charges customers royalties for using their devices, but searching through various sites does not refer, to success is the case, MediaTek could be a simpler solution for businesses that want to avoid license fees and royalties. The next generation of automotive vehicles could move to MediaTek as a result of Qualcomm’s practices.
Qualcomm can regain its market position. Still, the combination of COVID-19 and the fall in the global economy will see an increase in demand for low-cost alternatives. Second-hand computers will become more desirable, cheaper smartphones will become the preferred option, and a device that requires no licensing fees will see designers and consumers alike cheering. Qualcomm may contribute to the development of mobile technologies, but charging royalties as a result of patents could see them become increasingly unpopular.
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