MediaTek should remain focused on enhancing its technology to better compete against rivals including Qualcomm, Spreadtrum and HiSilicon, and to explore new growth opportunities outside the China market, according to Digitimes Research.
Becoming a technology leader in the competitive mobile-processor market could be difficult for MediaTek to achieve, but should be considered as an ultimate goal for the Taiwan-based company seeking its long-term growth, Digitimes Research said.
MediaTek with its complete turnkey solutions and cost advantage has been successful in partnering with China-based handset makers. Nevertheless, the Taiwan-based firm is facing a growing threat from competitors particularly China-based players including Spreadtrum and HiSilicon, which have become more able to provide competitive turnkey solutions in the entry-level and mid-range segments, Digitimes Research indicated.
While losing its advantage over its China-based rivals in the low- to mid-range segments, MediaTek is still facing strong competitiveness from Qualcomm in the high-end sector, Digitimes Research said. Qualcomm's new Snapdragon 820 has received positive feedback, and already attracted orders from Samsung, HTC, LG, Sony Mobile and Xiaomi.
Despite the company's increased focus on high-end chips, low- and mid-range offerings still account for the majority of MediaTek's total mobile chip shipments, Digitimes Research noted. MediaTek's gross margin remains under downward pressure despite revenue growth. In other words, lowering prices to expand shipments and market share would not drive long-term growth.
Besides, China continues to be MediaTek's biggest market. MediaTek is looking to expand its non-China-based customer portfolio, but efforts appear to have had only limited success, Digitimes Research observed.
In addition, new orders from Samsung Electronics are unlikely to make a positive contribution to MediaTek's long-term business growth, Digitimes Research noted. MediaTek has reportedly shifted part of its processor orders to Samsung's foundry business in order to gain chipset orders for Samsung's mobile devices. Such a business model could bring more risks and uncertainty, Digitimes Research said.
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