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【Market View】TrendForce: Mediatek and Spreadtrum Advance in China Market while Qualcomm's Chip Usage Declines
Published Jun.27 2013,17:53 PM (GMT+8)
TrendForce: Mediatek and Spreadtrum Advance in China Market while Qualcomm's Chip Usage Declines
Mediatek has been making an impressive run lately; not only is the Taiwan-based chip manufacturer commanding its way in the mid-to-high end smartphone space, it has also successfully penetrated the 4G mobile market thanks to its recently announced 4G chip. According to the latest statistical data compiled by TrendForce, a global market research firm, Mediatek's processors have been used by over 50% of China's branded smartphones since the MT6575 chip was introduced in 2012. Due in large part to factors such as high pricing and the lack of hardware and software compatibility with various Chinese-made devices, Qualcomm's chip usage rate has been gradually declining in China, and shrunk to as low as 33% in 2013. With Qualcomm and Mediatek both devoting their attention towards the mid to high end smartphone consumer segment, much of the low-end smartphone space has been left to Spreadtrum, which has recently unveiled a processor intended for low end hardware devices. In 2013, Spreadtrum's chip usage rate in the Chinese market grew to approximately 11%.
Figure-1 2013 Smartphone processor market share in China’s smartphone market
Despite being an indisputable leader in the high end smartphone market, Qualcomm’s MSM8X30, MSM8X26, and MSM8X25Q processors are still facing a lot of stiff competition in the low-to-mid end mobile sectors. A way Qualcomm may reverse its struggles in China is by taking advantage of the country’s rapidly growing 4G/LTE developments. The company will have a good chance of emerging as a major LTE market leader should China’s 4G business opportunities appear early next year.
Although Mediatek has generally been known to promote two new items on an annual basis, this year the Taiwan-based company has chosen to break away from tradition by announcing a total of four different products. The first --the MT6589-- was announced during 1H13, and is intended for the mid-to-high end smartphone market; the remaining three products—all of which are smartphone chips—are expected to be introduced at some point during 2H13. Among the new processors, the duo core, Cortex A7-based MT6572 chip stood out as particularly noteworthy given its potential to exert a lot of impact on the low end smartphone market. The said chip is unique in that it supports China's TD SCDMA system, is priced in a notably affordable range, and sports a good degree of compatibility with various low cost components (which could help push manufacturing costs down to as low as $US 40). All in all, this chip provides a perfect opportunity for Mediatek to compete against the low-end smartphone chips that are designed by Spreadtrum. The MT6575 is expected to become popular within the mid-to-low end smartphone market and should help Mediatek cement its position within the low end sector.
With China's recent plans to expand the TD-LTE coverage for its 500 million users by 2020, and with the 4G industry growing at a tremendously rapid pace, the LTE ecosystem in China is set to become more and more mature in the foreseeable future. Qualcomm is very likely to benefit from such a trend given its priority on the 4G/LTE business. Following the high end chip pricing war, the 4G/LTE market will likely become next battlefield for chip makers.