And MediaTek is taking its business model to other emerging markets. Its products support features that are popular in developing countries, like noise-reducing speakers and slots for two SIM cards.
In India, local brands like Spice and Micromax are introducing lower-priced smartphone models using MediaTek parts. In Brazil, phones by Motorola Mobility and local brands like Gradiente and Multilaser will also contain MediaTek chips.
“The markets we target have 5.8 billion people, whereas the US and Europe have less than 1 billion,” Ku said. “I need to aim at a global market, not just developed countries.”
MediaTek also released a chip last year for building basic smartphones that work in regions without mobile data networks. Users of these phones rely on Wi-Fi connections to download multimedia. These phones can cost as little as US$50. Those chips now account for 40 percent of MediaTek’s smartphone chip sales.
Mark Hung, an analyst at the research firm Gartner, calls the networkless chip one of the “fastest-growing smartphone segments,” as many consumers are looking to switch from their simple mobile phones to basic, low-cost smartphones.
“This is a fairly new phenomenon, and, as you can expect, mostly in emerging markets, including China,” Hung said.
For now, Apple has signaled that it has no intention of competing on price. The iPhone 5, released in China on Dec. 14, cost 300 yuan more than the two previous models, the iPhone 4S and 4, on their release days. More than 2 million units of the iPhone 5 were sold in its first weekend.
By contrast, Coolpad, Huawei, Lenovo, Samsung and ZTE have released new phones with similar performance at a third of the iPhone 5’s price of 5,288 yuan, and sometimes less.
“We believe that emerging countries should also be able to enjoy the use of information technology with the same computing power,” MediaTek chairman Tsai Ming-kai (蔡明介) said.
As the world’s largest market for smartphones, China is quickly becoming a bellwether for the progress of sales wars globally. The Chinese experience may show that any leading market position can be fickle, and new brands can appear seemingly out of nowhere to capture significant shares of the market.
Apple remains No. 2 in smartphone shipments worldwide after Samsung, but its position could be threatened as the competition expands to more consumers and more price points.
“Emerging economies are getting stronger,” Tsai said. “The industry dynamic is always evolving. Anything can happen.”