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MediaTek: Unknown OEMs may be next smartphone stars

Posted: 13 Mar 2012 ?? ?Print Version ?Bookmark and Share

Keywords:handset makers? smartphone market? feature phones?

MediaTek Inc. president, Ching-Jiang Hsieh, has been forging tight links with China's handset makers. He believes they will be the source of the next big wave of smartphones.

"We will sell 50 million handset chip sets this year, up from 10 million last year," said Hsieh in an interview with EE Times at the Mobile World Congress. "This year feature phones will decline for the first time!they were almost flat last year!because smartphones are growing," he said.

Market watchers agree. As many as 600 million smartphones will ship in 2014, and as many as half of them will be low cost models replacing feature phones, according to Linley Gwennap, principal of the Linley Group. Chips that integrate apps processors and basebands will power 70 percent of those handsets, up from 40 percent in 2010, Gwennap predicts.

Likewise, Strategy Analytics said China overtook the U.S. as the world's biggest smartphone market in the third quarter of 2011. The shift was largely thanks to China's cellular carriers who bought lots of models that cost less than $160, making it the fastest growing segment.

Ching-Jiang Hsieh

Hsieh: This year feature phones will decline for the first time!they were almost flat last year!because smartphones are growing.

Whether Mediatek can lead this new wave is an open question. The Taiwan-based company is battling with one of China's fastest rising fabless companies, Spreadtrum Communications Inc., which also has its eyes on this market.

Like MediaTek, Spreadtrum recently released GHz-class ARM Cortex A9 applications processors to serve the market for smartphones that hit a $100-$160 price point. Smartphone chip giant Qualcomm also is focusing increasingly on integrated chips.

Hsieh said part of Mediatek's edge is its relationships with and understanding of the China handset makers who he thinks will drive the shift. Four of China's top handset makers!Huawei, Lenovo, TCL and ZTE!make up 40 percent of MediaTek's handset business, and a diverse set of 100 other companies make up the rest, he said.

The big four are not only well known in China but have growing export businesses. MediaTek helps these OEMs quickly fill out the middle and low-end tiers of product lines.

Huawei's HiSilicon group has been making its own applications processors for some time. The Shanghai based team announced a quad-core chip at the Mobile World Congress with souped up graphics it claimed beat Nvidia's Tegra 3.

A lot of attention gets paid to such image products by the gadget-crazed media. But that segment of the market will grow at a rate a little less than two percent over the next few years while the overall smartphone pie expands by as much as 45 percent, Hsieh said.

China's second and third tiers
The China handset OEMs who make up 60 percent of MediaTek's business are not household names. Some are what Hsieh refers to as second tier companies who have a respected brand in China, but no real export business. They include three Shenzhen companies Gionee Communication Equipment Ltd, OPPO Electronics Corp. Ltd and BBK.

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