MediaTek plans to take the lead from Qualcomm, despite the unfair game
MediaTek is the largest Taiwanese designer of microelectronic chips for wireless communications and digital multimedia devices. In 2015, the Chinese smartphone market slowed growth, and MediaTek profits declined by 40% in the first three quarters. In recent years, MediaTek's business has grown rapidly due to sales of cheap components for the cellular market in China.
"Our revenue in the smartphone market is only about $ 4 billion, at Qualcomm it is about $ 17 billion, so we have great potential for growth," said MediaTek Chief Financial Officer David Koo. This year, MediaTek almost doubled sales of its processors in the Chinese market, where it controls about half of the locally made smartphones segment, and next year the increase in sales volumes may be limited to 70%, said Jeffrey Ju, operations director. Despite the recession, David Koo is convinced that the technological developments of his company will allow her to increase sales.
However, experts are not so optimistic: several times they lowered their forecasts for MediaTek this year. Randy Abrams, an analyst at Credit Suisse , explains that the deterioration in financial performance of a Taiwanese company is due to its desire to increase its market share to the detriment of profitability.
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True, and Ju from the spring of next year, no certainty in terms of increasing demand for MediaTek products is not waiting. Now we need to survive the winter, and in spring the demand will appear at least because of the need of people to replace broken and outdated smartphones, he believes.
With the slowdown in sales of smartphones in China, competition is intensifying. In the lower price range, which is dominated by chips that do not support LTE, MediaTek competes with Spreadtrum , which is controlled by the Chinese government. Here, according to Kü, “rivalry is about price, not about performance.”
Huawei , the largest smartphone maker in China, manufactures most of the necessary chips on its own. Its competitor plans to do the same - the company Xiaomi .
In the upper price range of MediaTek and Qualcomm, the margin is reduced due to price competition with each other, Vedomosti reports. MediaTek is actively developing LTE-enabled chips for expensive phones, and now they account for about 40% of all its sales in units. But MediaTek is still lagging behind Qualcomm in the area of technical standards, and this gives the American company a price advantage, analysts from Nomura believe. According to Mark Lee, analyst from Bernstein, MediaTek lags behind Qualcomm in terms of product specifications by about a year, but this lag is gradually reducing.
MediaTek does not consider its technological lag behind competitors noticeable, therefore the company has some confidence in its own abilities. Ku even claims that his company will eventually take over Qualcomm's technology leadership.
On November 18, Qualcomm received a report from the Korea Fair Trade Commission ( KFTC ) and accusations of violating South Korean antitrust laws. In particular, the report states that the practice of licensing Qualcomm patents violates the laws of the country, since the company's patents concern only the hardware component and force partners to license other intellectual property illegally.
Qualcomm does not admit his guilt. The company believes that the accusations in the KFTC report are not supported by the facts, and the practice of licensing is no different from the business principles of other companies, it is the norm and has not changed for two decades.
Last year, an anti-monopoly investigation into Qualcomm's activities in China began, which ended for the giant by paying a huge fine of almost $ 1 billion.
"Our revenue in the smartphone market is only about $ 4 billion, at Qualcomm it is about $ 17 billion, so we have great potential for growth," said MediaTek Chief Financial Officer David Koo. This year, MediaTek almost doubled sales of its processors in the Chinese market, where it controls about half of the locally made smartphones segment, and next year the increase in sales volumes may be limited to 70%, said Jeffrey Ju, operations director. Despite the recession, David Koo is convinced that the technological developments of his company will allow her to increase sales.
However, experts are not so optimistic: several times they lowered their forecasts for MediaTek this year. Randy Abrams, an analyst at Credit Suisse , explains that the deterioration in financial performance of a Taiwanese company is due to its desire to increase its market share to the detriment of profitability.
')
True, and Ju from the spring of next year, no certainty in terms of increasing demand for MediaTek products is not waiting. Now we need to survive the winter, and in spring the demand will appear at least because of the need of people to replace broken and outdated smartphones, he believes.
With the slowdown in sales of smartphones in China, competition is intensifying. In the lower price range, which is dominated by chips that do not support LTE, MediaTek competes with Spreadtrum , which is controlled by the Chinese government. Here, according to Kü, “rivalry is about price, not about performance.”
Huawei , the largest smartphone maker in China, manufactures most of the necessary chips on its own. Its competitor plans to do the same - the company Xiaomi .
In the upper price range of MediaTek and Qualcomm, the margin is reduced due to price competition with each other, Vedomosti reports. MediaTek is actively developing LTE-enabled chips for expensive phones, and now they account for about 40% of all its sales in units. But MediaTek is still lagging behind Qualcomm in the area of technical standards, and this gives the American company a price advantage, analysts from Nomura believe. According to Mark Lee, analyst from Bernstein, MediaTek lags behind Qualcomm in terms of product specifications by about a year, but this lag is gradually reducing.
MediaTek does not consider its technological lag behind competitors noticeable, therefore the company has some confidence in its own abilities. Ku even claims that his company will eventually take over Qualcomm's technology leadership.
On November 18, Qualcomm received a report from the Korea Fair Trade Commission ( KFTC ) and accusations of violating South Korean antitrust laws. In particular, the report states that the practice of licensing Qualcomm patents violates the laws of the country, since the company's patents concern only the hardware component and force partners to license other intellectual property illegally.
Qualcomm does not admit his guilt. The company believes that the accusations in the KFTC report are not supported by the facts, and the practice of licensing is no different from the business principles of other companies, it is the norm and has not changed for two decades.
Last year, an anti-monopoly investigation into Qualcomm's activities in China began, which ended for the giant by paying a huge fine of almost $ 1 billion.
Source: https://habr.com/ru/post/296860/
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