MediaTek May Not Ship 100M Chips In Q1 2017

MediaTek was once on top of the smartphone world in China and a few other territories, but squeezing by rival Qualcomm, among other factors, seems poised to push their first quarter numbers for 2017 below 100 million shipped chips. The disappointing first quarter comes after a fairly good 2016, which saw MediaTek put out somewhere around 480 million units, averaging out to 120 million per quarter. Should this pattern continue, MediaTek will post no growth for 2017, but stands to actually have a worse year by nearly 100 million units. MediaTek has been losing ground since the second half of 2016, thanks to many of their biggest Chinese clients, such as Meizu, Xiaomi, and OPPO, either shifting toward ordering more from Qualcomm, their biggest rival, or making their own chips.

Qualcomm butting in on MediaTek's turf is not the only factor of their recent troubles, but it's certainly one of the biggest; according to research by Digitimes, Qualcomm stands to shoot up to owning 30% of the smartphone chip market in China by the end of the quarter, while MediaTek will sink a bit, seeing only 40% of the total market under their own banner. On top of the market loss from Qualcomm stepping into the Chinese arena with a stronger foot than before, MediaTek has to contend with the plateauing of smartphone ownership and upgrade cycles; as devices become faster, more capable, and more durable, less and less people are getting new devices less and less often. While this also affects rival Qualcomm, MediaTek's troubles are compounded by the slowdown.

MediaTek's problems with profit growth are fairly recent; while Qualcomm has had a presence in the Chinese market for some time, MediaTek has ruled the roost practically since their inception. Outside of China, MediaTek's operations in India are being stepped on by Qualcomm, thanks to the massive popularity of Xiaomi's phones; the Chinese giant was court ordered to only use Qualcomm chips in their Indian smartphones. In other territories, MediaTek is largely relegated to the budget sector; in the United States, for example, MediaTek's chips can be found in some lower-end and mid-range phones from makers like BLU, whose business revolves around customizing and rebranding Chinese phones. Budget phones from more premium makers, such as Samsung's Galaxy J series and Moto's G series, meanwhile, all use Qualcomm processors. MediaTek's falling popularity is slightly offset by Samsung using them in a limited number of models in some territories, but it likely won't be enough to bring them back to profit growth unless something changes in 2017.

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