From U.S. Beachhead, MediaTek Faces Qualcomm & Other Mobile Giants

5/8/13Follow @gthuang

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high-performance chips for tablets, connected devices, smartphones, feature phones, and Wi-Fi systems. It means being used in cheap Android phones as well as higher-end products, where it will compete with the likes of Qualcomm and other big chipmakers. (Keep in mind MediaTek wasn’t even in smartphones until the second half of 2011.)

One of the firm’s key technologies is a quad-core mobile chip based on ARM’s Cortex-A7 processor, which is known for its energy efficiency. “We were the first to bring quad-core to the entry [level] segment,” Moynihan says. That chip, he says, balances the requirements of speed and power efficiency in a way that achieves longer battery life.

And the latest high-end version of the chip, called the MT6589, is designed for smartphones and tablets to play video on high-definition displays. What the chip doesn’t have yet—and this is a big deal—is LTE capabilities. “That excludes us from the majority of the U.S. market today,” Moynihan says, since 4G LTE is becoming prevalent.

That might be why big mobile players here aren’t paying much attention to MediaTek yet. But they will. “We will have our first LTE solution by the end of this year,” Moynihan says. “It will take time to roll that out and get operator approval. It’s the single most pressing need to address developed markets.”

And that’s where the company’s Austin, TX, office comes into play. MediaTek’s engineers in the Lone Star State are working on the spectrum and radio requirements for LTE networking capabilities. As Moynihan points out, Austin is “a fantastic area for physical design.” He cites Apple’s 2010 purchase of chipmaker Intrinsity; Samsung’s buildup in the region; ARM’s local presence; and a “strong history and legacy around processor design, architecture of CPUs, and physical implementation of those processors for low-power applications.” (Though Texas Instruments and Freescale are no longer in the mobile-chip business, he says.)

So how will things play out in the U.S. mobile-chip market? Not surprisingly, the MediaTek execs like their chances. They say device subsidies from wireless carriers have probably peaked in the U.S. and Europe (though they are increasing in China), which means mobile operators “will be looking for high-quality, lower-cost devices.”

But the real key is LTE. If and when MediaTek rolls out its LTE chips, the market could potentially open up quickly, with carriers like Verizon and Sprint moving to LTE from the CDMA2000 (3G) standard. (MediaTek doesn’t support CDMA2000, so it has not been able to sell to makers of Verizon and Sprint phones.)

“There’s not a lot of diversity in LTE chipsets yet,” Moynihan says. “2014 is going to be a much more interesting year for us.”

And for MediaTek’s competitors. After what Moynihan calls a consolidation “bloodbath” in the past few years, the field has narrowed. “Qualcomm is the gorilla in all this,” he says. “We think we’re uniquely positioned because we’re headquartered in Asia, where the market will be driven from. All the other guys in contention, you’re still looking at the West Coast.”

MediaTek touts its broad base of customers in lots of countries and its profitability in the mobile market. What is more, its execs like its progress so far. “In the entry part of the market, our roadmap has accelerated past Qualcomm’s,” says Moynihan. “That has the potential to start challenging our competitors.”

It certainly won’t be easy. But the constant state of flux in mobile networks and devices—plus the rise of Asia in mobile infrastructure and equipment—means if an outsider like MediaTek is able to follow through on its U.S. strategy, it could become a big player here.

“One thing I know about the mobile industry, if you think it’s at the status quo, it’s going to change,” Moynihan says. “It’s not long ago that Nokia and Motorola were at the top. Things don’t stay stable for long in this business.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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