Qualcomm, MediaTek Fill Vacuum HiSilicon Left in Smartphones

Article By : Alan Patterson

Qualcomm and MediaTek have plugged the gap that Huawei left when the US forced Huawei's HiSilicon out of the smartphone chip business last year.

Qualcomm and MediaTek have plugged the gap that Huawei left when the US government effectively forced Huawei subsidiary HiSilicon out of the smartphone chip business last year as part of the trade war between China and the US.

Chinese government-backed Huawei and its chip-design unit HiSilicon were at the top of the heap in the world’s smartphone business and were poised to dominate the 5G business just as the administration of former US President Donald Trump banned chip foundry Taiwan Semiconductor Manufacturing Co. (TSMC) from supplying semiconductors to HiSilicon.

At this time last year, HiSilicon accounted for about 15 percent of TSMC’s sales, making the chip designer the second-largest TSMC customer after Apple. Now, TSMC no longer supplies chips to HiSilicon, and that left a huge gap open to Qualcomm and MediaTek.

During the first quarter of this year, Qualcomm led the smartphone application processor market with a 40 percent revenue share, followed by MediaTek with 26 percent and Apple with 20 percent, according to market research firm Strategy Analytics.

“The trade war reshaped the global smartphone application processor (AP) market in the first quarter of 2021,” according to Strategy Analytics analyst Sravan Kundojjala. “Both Qualcomm and MediaTek made the most of HiSilicon’s forced exit from the smartphone AP market due to trade restrictions.”

The global smartphone AP market grew 21 percent year-on-year to $6.8 billion in the first quarter of 2021, according to Strategy Analytics. 5G APs accounted for 41 percent of total smartphone APs shipped during the quarter. Entry-level 5G APs such as Qualcomm’s Snapdragon 480 and MediaTek’s Dimensity 700 will help bring 5G smartphone prices lower in 2021, the market research firm said.

Growth will continue through 2021, driven by an increased mix of 5G-attached APs and post-pandemic demand, Kundojjala said.

HiSilicon’s smartphone AP shipments plummeted by 88 percent the first quarter of this year, according to the market research report, which suggested that Huawei may need to spin off HiSilicon’s smartphone chip business as a survival strategy.

Not standing down

Huawei appears determined to remain a major player in semiconductors and leading-edge electronics, even if that may not include 5G telecommunications.

Huawei has no intention of restructuring chip design subsidiary HiSilicon, according to Catherine Chen, a Huawei director and senior vice president, in an interview with Nikkei Asia.

HiSilicon, with more than 7,000 workers in 2020, is privately held, unaffected by external forces, and the company management intends to retain HiSilicon, Chen said in the interview.

Expecting that the US-China battle for high-tech supremacy will continue, Huawei still develops proprietary technologies at a research center that is seen as a modern-day Noah’s Ark, a repository of leading technology that wafts above a flood of difficulties, according to the Nikkei report.

HiSilicon will gain new supply chain partners in countries that are promoting their own semiconductor industries and do not rely on US technology, Chen was cited as saying.

The company is also entering new businesses that include designing silicon for ultra-high definition TVs and other types of consumer electronics.

This article was originally published on EE Times.

Alan Patterson has worked as an electronics journalist in Asia for most of his career. In addition to EE Times, he has been a reporter and an editor for Bloomberg News and Dow Jones Newswires. He has lived for more than 30 years in Hong Kong and Taipei and has covered tech companies in the greater China region during that time.

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