After realizing the status of the domestic GSM chip market as a “one big company”, MediaTek Technology Co., Ltd. (hereinafter referred to as “MediaTek”) has been active on the 3G chip layout early last year. However, due to the prevalence of Qualcomm, which has mastered chip core technology, and insufficient investment in 3G smart phone chips, it has been left behind by competitors. The market share of MediaTek’s painstakingly operating 2G chips has also been eroded by companies such as Spreadtrum. In desperation, MediaTek was forced to fight a dangerous price war with its rivals.

"Scorched earth policy"

MediaTek can claim the top spot in the domestic 2G chip market thanks to its "turnkey solution." MediaTek will complete the chip, software platform and design, mobile phone manufacturers need only buy screens, cameras, housings, keyboards and other simple parts can produce mobile phones. In the same year, MediaTek, which started as a DVD player, used this model to increase the annual DVD production of over a thousand companies in China to more than 50 million units. It also turned the once expensive DVD player into a bargain.

Zheng Zhaogang, analyst at CLSA Securities, commented that MediaTek's turnkey solution has facilitated the entry of new mobile phone manufacturers. "This significantly lowers the barrier to entry," Zheng Zhaogang said.

At the peak of MediaTek, almost all the chips of the Shanzhai mobile phone came from this company. There is competition in the market, and the competition of Spreadtrum Communications (hereinafter referred to as “Spreading”) has made the market pattern more subtle.

“The cottage has played an important role in promoting China's mobile phone industry, and it has made the industry chain perfect.” Wu Ping, founder of Spreadtrum Communications, said at a forum held by the company: “The emergence of a copycat machine has made the Chinese mobile phone market In a price-competitive market, the price war becomes the biggest feature."

IT Business News Network reporter learned that as of the middle of last year, Spreadtrum chips in the low-end GSM market share has exceeded 10%, which makes MediaTek's market share slipped below 90%. Some experts predict that this year's figure may further decline to 70%.

Industry analyst Sun Yongjie told the IT Business News Network reporter that "price war reflects the strength of the company from another perspective." To get rid of the entanglement of rivals, MediaTek was forced to adopt this method.

With the deepening of the price war, it will not only hurt the profits of MediaTek and Spreadtrum, but even the profits of the entire industry will be greatly reduced. Because the profits of the mobile phone brand manufacturers in the industry chain will be affected, this will become a competition where the participants lose all.

From the second half of last year, MediaTek’s chip product MT6253 began to drastically reduce its price. Insiders said that the price of this chip has dropped from the original nearly 5 US dollars to the current 2.8 US dollars. And MediaTek's new MT6252, an informed source disclosed at the time of its launch, its price will be set according to Spreadtrum's price of 6610L.

The price war is indeed a double-edged sword. According to the latest financial data released by MediaTek last month, MediaTek audit revenue in February this year was only NT$5.43 billion (1.01 billion yuan), a sharp drop of 39.8% compared with the previous month. It also set the lowest record since February 2007. In the first two months, MediaTek’s cumulative revenue was NT$12.06 billion (RMB 2.69 billion), a sharp drop of 43.8% compared to the same period last year.

What's worse is that in addition to low-cost means, competitors have also adopted high-paying methods to try to incite MediaTek's foundation.

Wang Yanhui, deputy secretary-general of the China Software Industry Association's Embedded Systems Branch, believes that as the price war deepens, it will not only hurt the profitability of MediaTek and Spreadtrum, but even the profits of the entire industry will be greatly reduced. Because the profits of the mobile phone brand manufacturers in the industry chain will be affected, this will become a competition where the participants lose all.

Sun Yongjie, a 3G chip maker, said that the price war damage to the chip makers is mainly in the 2G market, and only in the 3G chip market, it will strive to gain a certain share in order to reduce the losses caused by the price war. In fact, MediaTek and Spreadtrum have already started operations.

According to the IT Business News Network reporter, MediaTek has discussed the topic of choosing Windows Mobile or Android. During the discussion, many people think that Microsoft's system is more stable and mature, and many people use it, so they decided to take the Windows Moblie route. It caused today's backwardness.

After Android grew, MediaTek became Android's partner in July of last year. In February of this year's MWC, MediaTek launched the Android chip solution MT6573 based on WCDMA. But there is a terrible opponent in front of it: Qualcomm from the United States.

With the deepening of the price war, it will not only hurt the profits of MediaTek and Spreadtrum, but even the profits of the entire industry will be greatly reduced. Because the profits of the mobile phone brand manufacturers in the industry chain will be affected, this will become a competition where the participants lose all.

Qualcomm has been "bullying" MediaTek for a long time. For example, Qualcomm slowly reduced the price of low-end 3G chips from US$15 to below US$10, making MediaTek lose its advantage in the first 3G chips for low-end WCDMA handsets. In the thousand-dollar smart phone market, Qualcomm also announced that it will launch a chip that is suitable for a $100 Android smart phone.

Because Mediatek’s sales focus still relies on a large number of domestic manufacturers, it is obvious that they do not “feel” the MediaTek “Smart Phone Meals” so that the launch of smart phone products is quite limited.

Some commentators pointed out that after entering the 3G era, Qualcomm, which holds the core technology of the chip, has almost all the right to speak and the advantages of other manufacturers are gone. Some analysts also stated that “If the cost of 3G mobile phones is to be lowered, unless the chip can have several manufacturers to choose from a copycat machine, this is not possible. Patented technologies and agreements are all here in Qualcomm, and there is no way to get around. past."

For MediaTek, if you don't get the technical license of 3G chips from Qualcomm's hands, if you research and develop your own, the costs will be too high to be measured. Copying your success in the 2G chip field is almost a dream.

Wang Yanhui believes that Mediatek is currently outdated in smart phones due to its already completely inferior position in the WCDMA market competition. If it does not change its current strategy, it will be very optimistic. Spreadtrum will do the same. If it concentrates too much on GSM, it will also Gradually lose the future of smart phones and 3G and 4G markets.

However, Sun Yongjie said in an interview with an IT Business News Network reporter that because traditional functional mobile phones will still have a relatively large market for a long time, MediaTek's continuous improvement of functional mobile phone chips will shrink with smart phones. In terms of functional differences, combined with its price advantage, MediaTek’s prospects remain open.