Mon, Dec 02, 2013 - Page 13 News List

Qualcomm probe may be good for MediaTek: analyst

Staff writer, with CNA

Taiwanese chip designer MediaTek Inc (聯發科), which supplies chips mostly to Chinese phone makers, might benefit from a recent anti-monopoly probe in China into its rival, Qualcomm Inc, according to a foreign brokerage analyst.

Qualcomm, the world’s largest maker of chips for smartphones, said on Monday last week that China’s National Development and Reform Commission (NDRC) had opened an investigation into the company related to China’s anti-monopoly law.

The NDRC has advised that the substance of the investigation is confidential, Qualcomm said in a statement, adding that the company “is not aware of any charge by the NDRC” that it has violated the law.

The investigation is believed to be driven by some smartphone makers that have filed complaints with the Chinese government seeking to lower the licensing fees they must pay to chip suppliers, according to a study by Andrew Lu (陸行之), an Asia-Pacific semiconductor analyst at British bank Barclays PLC.


“We do not expect an announcement on the outcome of the investigation to be released any time soon,” Lu wrote in a report released on Friday. “However, if the outcome is favorable to the industry overall, we believe there could be some benefit for MediaTek’s smartphone IC customers.”

Chinese smartphone makers are currently paying from 3 percent to 6 percent of their phones’ free-on-board shipping prices as licensing fees, which rise if the companies are selling higher-end smartphones using premium components such as octa-core processors or 5-inch ultra-high resolution displays, Lu said.

The analyst estimated that smartphone vendors in China will need to pay nearly US$2.4 billion in combined licensing fees this year and roughly US$3 billion next year.

If Chinese phone makers no longer need to worry about rising licensing fees, they will be able to introduce smartphones with richer features by adopting MediaTek’s octa-core application processors, better screens, higher-resolution digital signal controllers, fingerprint sensors and additional memory, Lu said.


MediaTek, which controls a large share of China’s low-cost and mid-range smartphone market, unveiled the world’s first “true octa-core” mobile processor in China on Nov. 20 to woo the high-end smartphone and tablet markets.

The system-on-a-chip is expected to roll out in new mobile devices running the Android 4.3 “Jelly Bean” operating system by the end of this year and is slated to be installed in devices running the latest Android 4.4 “Kit-Kat” software early next year.

The Hsinchu-based chip designer said it expects its consolidated sales for the fourth quarter to decline by up to 5 percent from the third quarter to range between NT$37 billion and NT$39 billion (US$1.25 billion and US$1.31 billion) after taking the slow season effect into account.

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