Qualcomm's rival in the smartphone silicon business, MediaTek, is aiming to become one of the chip industry's first companies with 10nm products on the market starting in the second quarter next year.

The MediaTek product will be the X30, the next in the Helio line of smartphone processors. The company’s current Helio X20/X25, made on a 20nm process, was launched in the first half of 2016 with a tri-cluster CPU architecture and 10 processing cores.

“The X30 is going to be our first product coming out on the 10nm process,” said MediaTek Chief Financial Officer David Ku on a conference call to announce the company’s third-quarter results. “We should be among the first to offer a 10nm product.”

The X30 will make significant improvements over the X20 in terms of geometry, application processor, power consumption and modem, Ku said. The X30 will have a Cat 10 modem, putting it on a par with Apple’s latest smartphone, the iPhone 7. The X30 will be targeted at Chinese makers of smartphones selling in the range of 2,000 to 3,000 yuan ($295-$443), according to Ku.

MediaTek, which uses Taiwan Semiconductor Manufacturing Co. (TSMC) as its main foundry, will start shipping 10nm products in the second quarter of 2017. MediaTek expects shortages of 10nm and 16nm products next year because of supply constraints. MediaTek and Apple will be among the key customers using TSMC’s advanced processes.

Supply shortages that have crimped MediaTek’s shipments during the third quarter are likely to continue during the fourth quarter this year, the company said. Three months ago, MediaTek forecast that the Helio line would grow to account for about 20% of the company’s smartphone shipments by the end of this year.

However, the company said that customer momentum and supply shortages have resulted in declines for the Helio line in the company’s overall product mix. MediaTek forecast that its fourth-quarter shipments of silicon for smartphones and tablets will fall in a range of 135 million to 145 million units.

Big new customer?

The company appears to have its first design win with the world’s biggest smartphone maker, Samsung Electronics, according to Randy Abrams, an analyst with Credit Suisse, speaking on the conference call.

The first model we “got in” was on the low end, Ku said. MediaTek’s policy is not to comment on specific customers, Ku said. Still, he added that if the company gets a design win with a large customer at the entry level, MediaTek needs to be aggressive with pricing.

The company sells most of its smartphone chips to branded manufacturers in China such as Huawei, Vivo and Oppo. MediaTek also counts smartphone makers in Japan and South Korea among its key customers.

MediaTek currently has about 45% of the market for smartphone chips in China, according to the company. It has about 35% of the smartphone market in India and less than 10% of the market in the US, the company said.