AH Qualcomm and MediaTek

Qualcomm Losing Ground Fast In China

November 5, 2015 - Written By Muni Perez

Things are not easy for Qualcomm, the American chip maker titan based in San Diego, CA. If we look back just 2 years ago, in 2013 Qualcomm had the incredible market share of 95% of all mobile processors, crushing even giant Intel. However, 2014 and 2015 have not been kind to the company, as last year its market share was down to 66% and this year numbers don’t look good either. For the years to come, Qualcomm will face bigger challenges as the competition is gearing up to battle, especially in the largest smartphone market in the world – China, where the company got half of its revenue for 2014.

Qualcomm’s problems are mainly thanks to MediaTek, the Taiwanese chipmaker that has been gaining ground in the past couple of years and this is where Qualcomm’s lost market share is going to. You have probably noticed that several high-end Chinese smartphones are coming with MediaTek’s Helios processor, such as the Xiaomi Redmi Note 2 Prime, the Meizu MX5 and the HTCs One M9+ and A9, and it means the Snapdragon is being slowly ditched. Earlier this year the company had another blow in their chest, as Samsung decided to ship the entire Galaxy line for 2015 with their own family of processors, the Exynos.

And there’s more: together with selling processors, the company also makes a lot of money by selling baseband chips for mobile devices – the cellular part of your smartphone. Qualcomm still holds 64% of this $4.7 billion market, but MediaTek is following it closely, as analysts expect the Taiwanese company market share to reach 40 to 45% in this business. Not everything is lost, though. Samsung is likely to bring back the Snapdragon SoC on their high-end Galaxy S7 for next year, and several other big names such as LG have chosen Qualcomm’s chips for their devices.

That said, it will be interesting to see how the market will heat up. As MediaTek is gearing up for entering the US and European markets, other chip makers are also working to get a slice of the pie. Huawei has recently announced their new Kirin 950 monster chipset, and Intel is also working hard to gain ground in the mobile world. While revenue and profits weren’t hurt yet, Qualcomm is shaking itself in order to face these new challenges. As a result, back in July, 15% of its workforce was cut out on a move to save $1.4 billion, while taking additional cost-cutting measures.