Two main reasons for MediaTek to top the 5G smartphone chipset market

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Taiwan-based MediaTek had been named a fast-follower in the global cellular baseband processor market in the previous 4G and 3G eras, but when the 5G network arrived, MediaTek went head to head with their largest rival in the market and outperformed Qualcomm for the first time in Q3, 2020 by claiming 31% market share leading the 5G chipset market.

In the early introduction into the 4G era, Qualcomm took the lead in claiming almost 90% market share, contrary to the early stage of 5G entering the market, where Qualcomm contends with HiSilicon, MediaTek, Samsung and Unisoc.

What did MediaTek do right?

First is the choice of 5G technology development. There are two different radio frequency bands within the 5G network, the mmWave 5G and sub-6GHz 5G. 

While mmWave offers ultra-fast information delivery and avoids network congestion as is the case with LTE depending on the number of devices connected, it is also limited by the ultra-short range and suffers from blockage by physical objects, further limiting its availability to densely populated urban areas. 

On the other hand, sub-6GHz is faster than 4G but not as speedy as mmWave, but it compensates with a longer range and better penetrates objects leading to wider usage and is more viable for rural and suburbs. It has currently reached 90% 5G network coverage.

First: MediaTek focused on sub-6GHz for faster delivery

In the early stages of development, Qualcomm, which spends roughly 25% of its annual shares on R&D, chose to go full range in developing both sub-6GHz and mmWave in parallel, whereas MediaTek invested entirely in the sub-6GHz radio frequency band, this enabled MediaTek to quickly deliver to the market its first 5G chipset almost simultaneously as Qualcomm. 

It also turned out that mmWave is only recently becoming more common in North America.

MediaTek demonstrated deployment strategies into mmWave commencing in 2022-2023 after fully deploying sub-6GHz of the 5G market between 2020-2021.

Second: Mid-end market strategy

MediaTek also targets mid-ranged pricing markets. They quickly altered strategies introducing Dimensity 800 and Dimensity 700 targeting the mid-segment. China is the largest market for 5G phones. MediaTek also leveraged the gap that emerged due to the US ban on Huawei, successfully entering OPPO, realme and Huawei’s smartphones.

Qualcomm is unbeatable in the high-end market but only brought Snapdragon 690 to the mid-end market in 2020, leaving MediaTek to top the segment.

According to Counterpoint research director Dale Gai, MediaTek’s strong market share gain in Q3 2020 happened in part due to strong performance in the mid-end smartphone price segment ($100-$250) and emerging markets like LATAM and MEA. 

“The share of MediaTek chipsets in Xiaomi has increased by more than three times since the same period last year.”

And Dale believes both parties will continue to compete intensively through aggressive pricing, and mainstream 5G SoC products into 2021.

 

Source: Counterpoint, MediaTek

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