While Qualcomm Diversifies Away from Mobile, MediaTek Attacks
Financial analysts have been concerned about Qualcomm’s reliance on Apple. That fear was widely overblown*, but with Apple, Google, and Samsung designing their own smartphone silicon, it is certainly reasonable to worry that Qualcomm is putting too much of its IP in the mobile processor basket. At Qualcomm’s Investor Day last week, the financial community was excited to hear that Qualcomm is successfully diversifying its product line away from mobile processors, with huge gains in mobile RF components already and well-defined plans for strong growth in entirely new businesses like automotive and IoT.
Qualcomm’s Taiwanese rival MediaTek has long been evenly diversified. Two years ago, its major revenue sources were equally split among three areas: consumer IoT (smart speakers and other home devices), smart TV (where MediaTek has dominant market share), and chipsets for mobile phones and budget-to-mid-tier smartphones. However, over the past two years MediaTek used 5G to catapult itself to the smartphone SoC volume leader by shrewdly focusing on low and mid-band 5G implementation, leaving the trickier and more expensive mmWave implementation to Qualcomm. This has resulted in MediaTek taking over the smartphone SoC volume leader crown from Qualcomm, and MediaTek now gets more revenue from smartphones than anything else. (MediaTek’s other businesses have grown, too – just not as much as smartphones. More on this below.)
Rather than try to rebalance its portfolio, at its annual Executive Summit last week, MediaTek launched new chipsets that double down its investment in mobile and should move it significantly upmarket – and directly competitive with Qualcomm.
Dimensity 9000: MediaTek’s Bid to Displace Qualcomm for Flagship Smartphone SoCs
MediaTek’s previous line of 5G SoCs, the Dimensity 700, 800, and 1000 series, powered the company’s takeover of the top spot in smartphones. These chips were widely adopted by Chinese vendors such as Xiaomi and OPPO for their domestic market, but also sold well in other parts of Asia, and Europe. Only a handful of Dimensity phones made it to the U.S., but they include high volume A series phones from Samsung, so MediaTek’s market share shot up in North America, as well.
Despite Dimensity’s market success, it fell far short on performance when compared to Qualcomm’s higher end Snapdragons. Enter the MediaTek Dimensity 9000, an SoC with next-generation Arm processing cores, GPU, AI, and memory architecture. The Dimensity features an incredible specs list: it is being built on TSMC 4nm process with CPUs in a Really-Big/Big/Little configuration (new Arm Cortex-X2 at 3 GHz, 3x Cortex-A710, and 4x Arm Cortex-A510 for efficiency); the newest LPDDR5x memory architecture; an Arm Mali-G710 GPU with raytracing; a 5th gen AI processor; a 9 Gpixel/second ISP that supports triple camera 18-bit HDR video recording; Bluetooth 5.3 and LE; Wi-Fi 6E; and a Release 16 5G modem with three channel carrier aggregation for low and midband 5G.
MediaTek claims that the Dimensity 9000 beats Qualcomm’s Snapdragon 888 on application loading times, sustained gaming performance, AI performance and power efficiency. The new modem draws less power and will help carriers provide faster uploads, and combine their frequency bands for faster downloads.
Showing how your new chip (which isn’t out yet) beats yesterday’s tech from your competitor is only effective if the competition is standing still, and that certainly is not the case here. Qualcomm is expected to announce new Snapdragon 8 series chips at its annual Snapdragon Summit next week. However, the Dimensity 9000 will likely be competitive with whatever Qualcomm is introducing across at least some metrics, and that was simply not the trajectory MediaTek had been on in the past. The Dimensity 9000 may not be “8000 better” than the previous generation Dimensity 1000, but the numeric naming jump signifies a marked departure from the company’s past reliance on entry level and mid-tier products. That’s new.
Chip Wars 2: Qualcomm Strikes Back?
In addition to whatever else Qualcomm plans to introduce in Hawaii at its Snapdragon Summit, Qualcomm’s processors support mmWave 5G today, and Qualcomm sells the home-grown RF subsystems need to support mmWave alongside it. MediaTek is first promising mmWave support starting next year, and its customers need to purchase RF components elsewhere. mmWave provides extraordinary speed and capacity but at the same time suffers from drawbacks due to physics and economics that limit where and how widely it can be deployed. MediaTek has already shown that ignoring mmWave is a profitable strategy, and only Verizon in the U.S. actively requires mmWave on all its smartphones. That makes mmWave support more important from a marketing perspective than actual consumer requirements, but marketing matters, too. Qualcomm’s marketing managers can credibly make the case that true flagships have all the latest network technology, not just strong CPU, GPU, and AI performance.
Perhaps that explains why, at its Investor Day, Qualcomm announced that it has already locked down key OEMs two years out, including Xiaomi, Honor, Vivo, and OPPO. Given the 18 – 24 month design and production cycle, two year commitments are actually not uncommon, but it does provide evidence that Qualcomm expects to book significant flagship order volume despite the new MediaTek competition in this sector. Qualcomm also expects Samsung to use Qualcomm in 2022 in its Galaxy Z foldables sold globally and in 40 – 50% of its Galaxy S series (with the rest presumably using Samsung’s own Exynos SoCs).
MediaTek in WiFi, IoT, Chromebooks, and TV
MediaTek’s smartphone announcements were the most exciting, but the company is pushing forward in all of its other businesses as well, with one exception: while it showed off the broad variety of IoT brand partners, MediaTek said very little about upcoming chipsets. This does not indicate a slowdown in R&D; more likely, MediaTek is simply being coy to protect the interests of its biggest client, Amazon. Amazon recently announced a slew of new device initiatives; all of them feature a MediaTek chip of one kind or another.
MediaTek claims that it is now the leader Chromebook SoCs thanks to the surge in sales of low cost Chromebooks as a response to the pandemic. However, it believes that this is now a secular trend and there is opportunity to move up the value chain as investment in education continues. We agree, and in this case, the competitor on notice is Intel, not Qualcomm. MediaTek’s upcoming Kompanio 820 and 828 feature a 7nm process, faster CPU/GPU/AI, and better battery life, while supporting 2K 120Hz HDR displays, a pair of 16 MP (for front and rear on convertible designs), 4K export, and WiFi6E. Unlike Intel’s x86 chips, ChromeOS on MediaTek’s Arm processors natively support Android apps, which should offer better performance there. MediaTek claimed that, “compared to Intel, we have smaller battery size and longer battery life."
Fixed wireless home 5G routers is a key market segment, and MediaTek touted design wins with EE. MediaTek has such a wide portfolio of products for home WiFi routers and embedded WiFi chipsets that it has a sub-brand dedicated to them, Filogic. It announced two new Filogic products: the Filogic 130/A, a single low-power chip for IoT with WiFi, Bluetooth, and voice activation, and the Filogic 330, a tiny single chip for premium notebooks with WiFi 6E, lower power WiFi receive, and Bluetooth. WiFi 7 products will be demo’d at CES in January; WiFi 7 will be faster, better at rejecting interference, and offer lower latency.
MediaTek powers two billion televisions, and its new Pentonic 2000 chip should help drive huge 8K late next year. The Pentonic 2000 is a 7nm chip that supports 8K at 120 Hz with AI upsampling and Dolby Vison. Using a 7nm processor for a television seems like overkill until you realize that there is essentially no native 8K content: everything needs to be upsampled, and image processing on an 8K TV is so complicated that it genuinely requires dedicated AI resources. The Pentonic also features higher quality picture-in-picture modes for new applications like video conferencing and watch parties. One key feature matters to OEMs rather than the end consumer: the Pentonic 2000 includes global broadcast standards, enabling vendors to build one set and sell it in multiple geographies.
MediaTek Future Growth
Looking forward, MediaTek sees three big avenues of growth:
Selling more of its fixed wireless and WiFi assets into Tier 1 broadband operators.
Custom chips for enterprise data/networking and AR/VR. Qualcomm is the clear market leader for off-the-shelf XR processors, but the customization aspect should be extremely interesting to companies looking to compete with Meta with a differentiated offering. Apple will certainly be designing its own processors, but Amazon is an obvious big potential customer. Microsoft could be in play as well for future HoloLens headsets; current models use Qualcomm CPUs and a Microsoft-designed HPU (Holographic Processing Unit).
IoT for industrial applications. MediaTek is already a leader on the consumer IoT side.
While Qualcomm hopes to grow in IoT and is clearly already competing with MediaTek in fixed wireless, in other respects MediaTek and Qualcomm are steering clear of each other. MediaTek is not specifically targeting automotive, wearables, or the data center market, which are among Qualcomm’s main targets for diversification.
To discuss the full implications of this report on your business, product, or investment strategies, contact Techsponential at avi@techsponential.com or +1 (201) 677-8284.
MediaTek Executive Summit Live Twitter Coverage
For additional context, MediaTeks presentation slides, and some light snark, here is my live coverage on Twitter in three threads:
· Day 1, Part I (Intro/growth plans, WiFi)
*While widely reported in the financial press, the concern that Qualcomm is overly dependent on Apple is overblown. While the unit volumes are significant, Apple only buys modems from Qualcomm, not processors. Qualcomm negotiated terms with Apple over those modems knowing full well that Apple would attempt to build its own modems, likely incorporating engineering resources and IP from Intel’s radio division into Apple’s own preexisting R&D efforts (which it subsequently purchased). Qualcomm knew from the start that this was a temporary situation and planned accordingly.