TAIPEI — MediaTek, the second-ranked smartphone chip supplier after Qualcomm, said that its market share has continued a slide that started earlier this year due to a slowdown in product upgrades.
MediaTek’s rivals, including some in China, appear to be making headway with handset makers such as Huawei, Oppo and Vivo, which have continued to outpace the growth of the top two smartphone makers, Samsung and Apple, according to a report from market research firm Gartner.
“We are still losing market share,” said MediaTek Senior Vice President David Ku on a conference call to announce the company’s second-quarter results. “We won’t reverse that trend until the fourth quarter this year.”
MediaTek's second-quarter 2016 sales were NT$72.5 billion. The company’s second-quarter 2017 sales were NT$58.1 billion ($1.92 billion). It plunged 19.9 percent from the same period a year ago. Net income was the worst in more than five years.
Qualcomm and Shanghai-based Spreadtrum appear to have won market-share gains at Mediatek’s expense with dual-core chipsets, according to Randy Abrams, an analyst with Credit Suisse, speaking at the quarterly event.
Mediatek said that R&D headcount will only “increase slightly” this year to keep operating expenses under control. The company is considering “relatively mild” increases in new hiring next year.
Most of MediaTek’s R&D investment this year will go toward 16-nm and 12-nm products, said Ku. The company, which counts on Taiwan Semiconductor Manufacturing Co. (TSMC) as its main foundry supplier, expects to have some 7-nm products coming out next year.
The top-three Chinese smartphone makers — Huawei, Oppo, and Vivo — are driving sales with competitively priced, high-quality handsets, according to Anshul Gupta, a research director at Gartner. Aggressive marketing and sales promotion have helped the Chinese brands gain share in markets such as India, Indonesia and Thailand, he said.
MediaTek noted that its competitors such as Qualcomm have been rolling out streamlined versions of chips for no-frills 4G feature phones.
MediaTek plans to take a slightly different approach.
“Given the limited resources we have right now, we will probably double-down on entry-level 4G smartphones,” said Ku. “If 4G feature phones become a trend, we can always jump back in later on.”
The company’s flagship Helio smartphone products still account for about 10 to 15 percent of MediaTek’s overall revenue. The company aims to reprioritize its product portfolio this year to focus on the Helio P series. The Helio X series is focused on extreme performance, while the P series is optimized for super-slim smartphone designs. The new P series will support Cat 7 later this year.
MediaTek has slowed the pace in product upgrades for its Helio product line, offering nothing better than a Cat 6 modem during the first of this year, while rival Qualcomm raised the bar with the world’s first 10-nm processor, the 835 Snapdragon, including a Cat 16 modem.
MediaTek plans to introduce Cat 10 or Cat 12 products by 2018.
The company said that its IoT products are outpacing growth in the smartphone business. MediaTek now gets more than half of its business from non-smartphone products, including chips for the IoT, set-top box and automotive segments.
—Alan Patterson covers the semiconductor industry for EE Times. He is based in Taiwan.