Mediatech Dimension City AP. Mediatek homepage capture
In the third quarter, the global smartphone AP (application processor) market had an unusual change. Taiwan’s semiconductor fabless (design specialized company) MediaTek surpassed Qualcomm in the US and climbed to the top in the global AP market share (based on shipments). Samsung Electronics, which produces AP’Exynos’, fell 4 percentage points from the same period last year, and tied for third place with Apple and Hi-Silicon. What happened to the global AP market in the third quarter?
First in the world with 31% of smartphone AP market share
On the 24th, a market research firm Counterpoint Research announced that “Mediatek became the world’s number one smartphone chipset company for the first time in the third quarter of 2020.” Mediatek’s share of AP shipments based on AP shipments was 31%, with Qualcomm (29%). And Samsung Electronics, Apple, and Hi-Silicon (more than 13%) In the third quarter of last year, Qualcomm ranked first with 31%, MediaTek ranked second with 26%, and Samsung Electronics ranked third with 16% and fourth. High Silicon (12%) ranked 5th with Apple (11%), while Qualcomm (29%) ranked first and MediaTek (26%) ranked second in the second quarter.
Global AP market share in Q3 2020. The outside is in the third quarter of this year, and the inside is in the third quarter of last year. Counterpoint Research
MediaTek is a Taiwanese fabless company founded in 1997. It started from the design house of UMC, the second largest foundry in Taiwan and the third largest in the world as of the third quarter (a company that acts as a bridge between a semiconductor company specializing in design and a foundry company that produces products according to design). The smartphone AP, named’Helio’, is the flagship product, but it is evaluated that the competitiveness of semiconductors for TV is not easy.
MediaTek used a strategy aimed at the niche market of Samsung Electronics and Apple, which had produced chips mainly from Qualcomm in the US and APs used in its smartphones. MediaTek mainly used the strategy of selling low and mid-priced APs to Chinese companies at low prices.
Enjoy’reflected profit’ from Huawei sanctions
Mediatek’s’surprise number 1’in the third quarter is not irrelevant to the recent changes in the smartphone market. First of all, it is Huawei’s downfall. According to Counterpoint Research, Huawei’s global smartphone market share fell to 14% in the third quarter due to the influence of the US export regulations.
Even in the Chinese market, it is enduring with’patriotic consumption’, but it is a difficult situation. According to market research firm Canalis, Huawei’s smartphone shipments in China in the third quarter were 34.2 million units, down 18% from the third quarter of last year. It is the first time in six years since 2014 that Huawei’s quarterly Chinese smartphone shipments fell year-on-year.
Chinese smartphone makers such as Xiaomi, Oppo, and Vivo are among the companies that are eroding the share that Huawei lost. Xiaomi’s share of the global smartphone market was 13% in the third quarter, followed Huawei to the bottom of the head, and Oppo (8%) and Vivo (8%) also ranked fifth in the world.
Huawei has a big difference in terms of Xiaomi, Oppo, Vivo and AP strategy. Huawei mainly used the’Kirin AP developed by its subsidiary Hi Silicon. However, Xiaomi, Oppo, and Vivo do not produce their own APs, but buy them from specialized companies. Due to the characteristics of Xiaomi, Oppo, and Vivo, which mainly produce mid-to-low-end phones, Taiwan’s mediatech, whose main focus is on mid- to low-end APs, was mainly used.
As Huawei sales decreased and smartphone sales such as Xiaomi increased, MediaTek’s market share naturally increased. An industry insider explained, “We know that Xiaomi’s MediaTek AP orders have more than tripled compared to before Huawei’s sanctions,” and said, “Mediatek is enjoying a reflective profit from the US sanctions on Huawei.”
Samsung Electronics, which competes with Chinese companies in India and Latin America, where’mid- and low-priced phones’ are popular, is also using MediaTek chips in smartphones to secure profitability. The Galaxy A31 is a prime example. The phone contains MediaTek’s Helio P65 AP.
Actively targeting the 5G AP market
MediaTek’s active release of APs for mid-range 5G smartphones is also a reason for its market share increase. Like Qualcomm’s’Snap Dragon’, Apple’s’A’, Samsung Electronics’ Exynos, and Hi-Silicon’Kirin’, MediaTek also has brands. The popular lineup is named’Helio’. MediaTek is also developing’Premium’ APs, and these products use the model name’Dimensity’. ‘Dimensity 1000’, a 5G AP, is representative.
MediaTek is actively targeting the popular 5G smartphone market with’Dimensity’. Recently, Chinese companies such as Xiaomi, Oppo, Vivo, and Real Me are also aggressively launching 5G smartphones. These smartphone makers mainly use Qualcomm’s’Snapdragon’ AP for premium products marked with’Pro’ and’Plus’, but they use MediaTek’s’Dimensity’ AP for general products.
Mediatek’s earnings are on the rise. According to Trend Force, a market research firm, MediaTek’s sales in the third quarter were $3.3 billion, up 53.2% from the third quarter of last year ($2,154 billion). This greatly outpaced Qualcomm’s sales growth rate (37.6%) during the same period.
‘I need to secure a Chinese customer…” Samsung Electronics’ growing concerns
As MediaTek is better off, the concerns of Samsung Electronics’ System LSI Division that develops and sells Exynos grows. This is because the market that Samsung Electronics is paying attention to and the market led by MediaTek overlap. From the perspective of Samsung Electronics’ System LSI Division, which needs to increase sales, Xiaomi, Oppo, and Vivo are customers that cannot be given up.
Samsung Electronics is making visible results in transactions with’Vivo’. Last year, the Exynos 980 AP was delivered to the Vivo’X30′ smartphone. The recently released’Exynos 1080′ AP will enter Vivo’s 5G smartphone’X60′, which is scheduled to be released on the 29th.
Samsung Electronics’ SNS post announcing the release of premium AP’Exynos 2100′ on the 12th of next month. Samsung Electronics SNS capture
However, the situation is a little different regarding Xiaomi and Oppo. A senior Samsung Electronics official met with a reporter in October and said, “Next year, we will deliver Exynos to Xiaomi and Oppo,” but there is no official announcement regarding the success of the delivery so far.
Recently, there is also a story that “Samsung Electronics’ smart phone AP development strategy has changed to focus on’development of advanced chips for its own smartphones’ instead of’expanding external sales’.” The System LSI division, which is in charge of external sales of Exynos, is trying to increase sales and profit margin by increasing external sales, but a different voice is coming from Samsung Electronics, saying, “Like Apple, we should focus on developing premium APs for our smartphones.” Apple developed APs such as’A14′, produced it by foundry companies such as TSMC, and used it exclusively for its smartphone’iPhone’.
Reporter Hwang Jeong-soo [email protected]