MediaTek aims to cut Qualcomm's lead in China's 4G market

With China's strong LTE market growth, Taiwan-based MediaTek is set to roll out its 4G LTE products faster than it did in the 3G handset business. MediaTek President Ching-Jiang Hsieh has stated this rapid entry goal during the company's report of its 2014 third-quarter earnings.

The chip designer aims to pare Qualcomm's lead in China's 4G smartphone market with the launch of an octa-core processor in the first quarter of 2015. MediaTek earlier this year started sampling its MT6795, a 64bit LTE True Octa-core SoC, part of a product line-up of LTE chips aimed next year at matching Qualcomm's existing range of high, medium and low-end products.

The company will double its output of LTE chips from 10 per cent of total production in the third quarter this year to 20 per cent during the fourth quarter, Hsieh said.

MediaTek in October announced its MT6735, which incorporates four 64bit ARM Cortex-A53 processors and extends the company's LTE line-up by adding WorldMode modem capability. The MT6735 line will be positioned in the same range as Qualcomm's recently announced Snapdragon 210, both addressing low-end price points.

MediaTek said it is on track with its expectations to ship more than 350 million smartphone chips this year, among which more than 30 million will be LTE products.

The company said that in the fourth quarter, it expects to ship about 90 million to 100 million smartphone chips and about 40 million chips for tablets. The tablet market will grow next year, albeit at a slower pace, MediaTek said.

Focus on smartphones

The company's focus remains on smartphones, MediaTek CFO David Ku said. "We're aiming to catch up in the smartphone business," he said.

The Hsinchu, Taiwan company currently has a larger share than Qualcomm in China's 3G handset business.

In 4G, "the product mix should be slightly better than what we have right now" in 3G, Ku said.

MediaTek has "done a good job" in increasing its product mix over the last three to four years, Bank of America Merrill Lynch analyst Daniel Heyler said. "The 4G market, I presume, will be segmented very much like the 3G market in terms of price points, ultra low-cost, mid and high end," Heyler added.

Ku said it is a "reasonable assumption" that the biggest contribution to MediaTek's earnings in the future will come from 4G octa-core chips.

Earnings up

For the third quarter this year, MediaTek posted consolidated net income of $440 million, up 58 per cent from the same period a year ago.

MediaTek will aim the octa-core MT6795 at Chinese smartphone brands such as Xiaomi and Huawei. The MT6795 will be on a par with Qualcomm's 600 to 800 Snapdragon SoCs, which were launched during 2013. The MediaTek chip will support the widescreen WQXGA display standard and run at a clock speed of about 2.2GHz, he added.

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