Feeling the heat, MediaTek seeks a comeback
12/20/2010 10:37 AM EST
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Taiwanese fabless chip vendor MediaTek defied gravity during last year’s recession, growing by more than 20 percent in a year when the wider semiconductor industry declined by roughly 10 percent. But 2010 has been a different story: The wireless chip vendor that some have called the Qualcomm of Asia is believed to have returned to more modest, 6 to 8 percent growth, compared with estimates of a stellar 30 percent for the chip sector at large. The Hsinchu-based company, ranked 17th in the world in chip revenue in 2009, is on course to finish at 21 this year, according to market researcher IC Insights.
MediaTek’s sales have grown from just under $1.5 billion in 2005 to a projected $3.5 billion-plus this year, fueled in large part by its dominant position in the Chinese cellular chip market. But some companies, notably China’s Spreadtrum Communications Co. Ltd., have been cutting into MediaTek’s market share with aggressive pricing.
A new report on MediaTek by EE Times Confidential’s partners at UBM TechInsights provides a comprehensive overview of MediaTek, which was spun out of foundry United Microelectronics Corp. in 1997. The report examines MediaTek’s organization, technology, product portfolio, design wins and partnerships, and offers a detailed look at the company’s intellectual property positions and patent portfolio.
It concludes that MediaTek is bent on graduating from sockets in low-end handsets and other products in the Chinese market to design wins with bigger companies in other regions.
"MediaTek is trying to get out of the low-end markets and position itself as a player with tier 1 companies," says Gordon Holstead, a senior analyst for business intelligence at UBM TechInsights and a co-author of the MediaTek study.
TechInsights concludes that MediaTek is pinning its growth plan on markets outside of China, including India and North America. In hopes of boosting margins and securing design wins in higher-end handsets, the company in July licensed technology for Long Term Evolution (LTE) from NTT Docomo. It is now shipping a multimedia GSM/GPRS solution that UBM TechInsights says integrates the baseband, RF and power management on one chip.
For its part, MediaTek considers 2010 to have been a "flat year" following the robust growth of 2009. Its wireless product line has been in transition, with 3G and smartphone solutions that were rolled out early this year expected to begin generating revenue in 2011, the company says.
MediaTek’s size and rapid growth have put it on the semiconductor industry’s map. But few in the West have a detailed perspective of the company, which does not actively market itself in the United States. According to UBM TechInsights, MediaTek generated 72 percent of its 2009 revenue from wireless and handset connectivity chips, while 16 percent came from digital TV and DVD chips and 12 percent from PC optical storage devices.