TAIPEI — MediaTek, Qualcomm’s largest rival in the smartphone silicon business, is forecasting slow growth during the first quarter this year as the overall market remains in the doldrums.
Taiwan’s biggest semiconductor design house expects to ship about 105 million to 115 million chips for smartphones and tablets during the first three months this year. That compares with the company’s forecast of 100 million to 110 million unit shipments during the same period last year.
Mediatek’s strong growth in recent years may be slowing to a rate that’s more in line with the expansion of the overall smartphone market. Market research firm IDC is forecasting unit growth of 4.6 percent in 2017. Little more than a year ago, smartphone growth was still in double-digit territory.
“There’s still pretty good demand,” said MediaTek Senior Vice President David Ku on a conference call to announce the company’s fourth-quarter 2016 results. “We aim to grow our market share in every region of the world.”
The company counts on smartphone makers such as Huawei and Micromax in emerging markets such as China and India for most of its sales. Still, Mediatek has recently started selling products to Samsung, the world’s largest smartphone maker, leaving Apple the only major handset company it doesn’t count as a customer. Apple currently uses modems from Qualcomm and Intel.
Analysts participating in the conference call had questions about Mediatek’s strategy to include new high-end modems meeting the Cat 7 specification in the company’s product mix. MediaTek’s top-end Helio X20 has a Cat 6 modem while Qualcomm’s Snapdragon 810 features a Cat 9 modem and the Snapdragon 820 has a faster modem with Category 12 support.
“Starting from the end of this year and the beginning of next year, we will have new products focusing on new architectures,” Ku said in response to Morgan Stanley analyst Charlie Chan. “We need to prioritize our resources on which products will use these new modems.”
For most of this year, MediaTek will focus on ramping up entry-level products, Ku said. The company expects to announce a new product meeting Cat 12 specifications by the second quarter of this year, he added.
MediaTek’s newest smartphone offering coming out later this year, the X30, will have a Cat 10 modem, putting it on a par with the modem in Apple’s latest smartphone, the iPhone 7. The X30 will be targeted at Chinese smartphone makers selling handsets in the retail price range of 2000 to 3000 yuan ($295-$443).
The company sells most of its chips to branded manufacturers in China such as Huawei, Vivo and Oppo, which are among the world’s fastest growing smartphone makers. The Chinese companies have a chance to fill in a gap left by Samsung’s halted production of its flagship Galaxy Note 7 smartphone last year after battery problems resulted in explosions and fires.
Even so, MediaTek faces competition from some of its key customers in China. Huawei is making its own smartphone chips at its fully owned HiSilicon semiconductor unit. Huawei uses the HiSilicon Kirin 960 chip in the Mate 9 smartphone, released in November last year.
-- Alan Patterson is a technology and business reporter based in Taipei.