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Big spender: MediaTek ploughs $48.9M into China's chip fund

Posted: 26 Nov 2014 ?? ?Print Version ?Bookmark and Share

Keywords:China? Shanghai? investment? MediaTek?

Accelerated entry

MediaTek aims to enter China's 4G market more quickly than it did in 3G as competition builds with Qualcomm and Intel. (See MediaTek aims to cut Qualcomm's lead in China's 4G market)

Intel in September announced an agreement to take a 20 per cent stake worth $1.5 billion in China's Tsinghua Unigroup Ltd., the owner of chip designer Spreadtrum Communications and RDA.

Qualcomm has a 68 per cent share of the global base band chip business that was worth $5.2 billion in the second quarter of this year, according to Strategy Analytics.

China's market for mobile phone processors is on track to reach 120 million units by the end of this year. Credit Suisse analyst Randy Abrams estimates that Qualcomm has about half of that market, followed by MediaTek with about a quarter. Spreadtrum accounts for 5 per cent, trailed by other companies such as Marvell Technology and Intel.

MediaTek in October 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.

MediaTek's investment in the Chinese semiconductor fund may signal a closer relationship with Shanghai-based SMIC. MediaTek currently sources most of its chips from Taiwan Semiconductor Manufacturing Corp. (TSMC). Qualcomm sources chips from TSMC and SMIC.

SMIC is poised to grow as a result of the incentives provided by the Chinese government, according to Credit Suisse's Abrams.

"We are seeing [Chinese] foundries receive favourable government grants, equipment subsidies, equity stakes from state-backed enterprises, opportunities for joint-venture fab investments to share capex with local governments, and foreign suppliers manufacturing locally, as we saw with Qualcomm's sourcing at SMIC," Abrams says.

- Alan Patterson
??EE Times

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