MediaTek Persuading Chinese OEMs to Adopt Helio SoCs to Reduce Reliance on Qualcomm

MediaTek Persuading Chinese OEMs to Adopt Helio SoCs to Reduce Reliance on Qualcomm

In recent times, MediaTek has seen its market share decline in the SoC space because of Qualcomm. At one point, MediaTek’s SoCs were exploding in terms of popularity in China because of their affordable prices, but since the last few quarters, that has not been the case. The company’s flagship Helio X30 SoC was only used by a few smartphones numbering in the single digits in China this year.

Then, reports stated that the company is seemingly backing down in the flagship SoC space on account of Qualcomm’s dominance in the space. The company was said to now focus on its mid-range Helio P chipsets. In terms of performance, MediaTek’s mid-range and flagship SoCs have not been able to match Qualcomm’s latest SoCs, and accordingly, OEMs have switched to Qualcomm SoCs in their devices.

However, it’s not all bad news for MediaTek, as Qualcomm is facing its own share of issues. The US chip maker is facing investigations and fines by antitrust regulatory agencies in multiple countries, and is currently involved in a $1 Billion lawsuit against Apple. Moreover, Qualcomm recently rejected Broadcom’s $105 billion bid to acquire the company on account of the bid “significantly undervaluing Qualcomm”. It is unknown how Broadcom will respond to Qualcomm’s rejection of its bid, but the company’s CEO has indicated that he is open to launch a takeover battle.

This is where MediaTek has sensed an opportunity. The Taiwanese chip maker is said to be aggressively persuading Chinese smartphone vendors to adopt its Helio P series SoCs in order to reduce risks of heavy reliance on Qualcomm (whose operations could be affected by the Broadcom acquisition bid), according to a report by Digitimes.

Digitimes states that Chinese OEMs, especially those producing low-end and mid-range smartphones, are watching the latest developments to assess the impact of Broadcom’s recent unsolicited bid to acquire Qualcomm. The report adds that the OEMs are also trying to adjust their smartphone chip quotes downward and adjust order placement ratios, which means MediaTek and Qualcomm are now in a fierce competition for orders.

The important thing to note in the report is that it states: “Broadcom has claimed that if the deal becomes a reality, it will closely cooperate with global first-tier smartphone vendors to settle Qualcomm’s royalty payment controversies, and will try to hike the average selling prices (ASP) of smartphone chips to boost Qualcomm’s gross margins to 60%“. This has serious implications for the adoption of Qualcomm’s low-end and mid-range SoCs such as the Snapdragon 400 and 600 series.

Digitimes went to to state that in order to achieve the hike in ASPs, Broadcom (in the event of having succeeded in acquiring Qualcomm) may have to quit the budget and mid-range chip market segment which is characterized by fierce price competition. Instead, the company will focus on the high-end chip market (Snapdragon 800 series) for flagship smartphones sold by top vendors such as Samsung and Huawei. The report noted that OEMs selling phones priced under $600 could also see “dwindling technical support from Qualcomm” for SoCs.

Of course, this is encouraging news to MediaTek, as the company operates mostly in the chip market for budget and mid-range smartphones. According to Digitimes, the company is said to have recently convened an emergency meeting to work out new marketing strategies in the wake of Qualcomm’s recent prospects; the company also thinks Qualcomm may be “mired in the takeover bid”, which will give MediaTek a chance to regain its lost market share in China.

Finally, the report stated that Chinese smartphone supply chain players are wondering whether Qualcomm will change its royalty calculation formula. Multiple Android OEMs are now seeking to renegotiate royalties with the US chip maker.

The supply chain players are also wondering if Qualcomm’s Snapdragon 430, 435, 625, 630 and 660 mobile platforms for budget and mid-range smartphones will be suspended. In order to mitigate the possible risks of suspension, Chinese OEMs are said to be moving towards diversification of mobile chip supply sources. This has the effect of enabling MediaTek to net more chip orders in the first half of 2018.

Source: Digitimes

About author

Idrees Patel
Idrees Patel

Idrees Patel is a smartphone enthusiast from India. He has been an Android user since the time he got the LG Optimus One in 2011. He has a bachelor's degree in Management Studies. The subjects in which he is interested are mobile processors, real-world UI performance, in-depth camera quality analysis, and many more. Contact him at [email protected]