The unthinkable may have happened – research firm Omdia claims Qualcomm has lost its leadership position in shipping smartphone chips to MediaTek, because of US sanctions against Huawei.
The firm’s latest report says MediaTek took 27% of the smartphone chipset market in 2020, just ahead of Qualcomm’s 25%, although the US firm still dominates 5G and powered 39% of the 5G handsets sold worldwide in the third quarter of 2020.
But the US sanctions are, as predicted, hurting US firms as well as Huawei. Those sanctions have denied Huawei access to most US components, since US chip suppliers are barred from supplying the Chinese giant without special licences (which have generally not been forthcoming). In addition, Huawei has been restricted in its ability to source foundry capacity for chips made by its own subsidiary, HiSilicon, since Taiwan’s TSMC cut ties with its second largest customer in the interests of keeping business with its largest (Apple) and other US majors such as Qualcomm itself.
All that has increased the business Huawei does with MediaTek (which, though Taiwanese, has not yet been forced to make a choice between Chinese and US business as TSMC was). And while Qualcomm had not been a significant supplier to Huawei for years (although the two companies have a patent licensing deal), the swing has been enough to boost MediaTek sufficiently to overtake Qualcomm, according to Omdia’s estimates.
“After the US government’s ban on Huawei, Huawei started to use MediaTek chips,” wrote Omdia. “As a result of leading brands utilizing MediaTek technology, other brands also followed, diversifying their respective supply chain. The US technology ban highlighted the need to consider potential political impacts on established supplier relationships.”
Many handset makers are taking advantage of Huawei’s problems to boost their own development and sales efforts in pursuit of market share. These have often turned to MediaTek for affordable smartphone chips. “Affordable MediaTek chips fabricated by TSMC became the first option for many OEMs to quickly fill the gap left by Huawei’s absence,” said Dale Gai of Counterpoint Research in a report in late 2020.
One of the handset makers filling the gap left by Huawei’s decline is China’s Xiaomi, which stole significant market share from its compatriot in the fourth quarter.
Xiaomi’s Q4 smartphone revenue was RMB42.6bn ($6.5bn), up more than 38% year-on-year, and accounting for about two-thirds of its total. According to market research firm Canalys, the company’s smartphone shipments grew by a record 52% year-on-year in China in the quarter – the highest rate of growth among its main rivals in the country including Apple, Samsung and Huawei. Xiaomi increased its domestic market share from 9.2% in Q4 2019 to 14.6% a year later.
Globally, Xiaomi claims to be third behind Apple and Samsung now, taking 12.1% market share in Q4. A year earlier, Huawei looked within reach of overtaking Apple for the number two spot but in 2020, US sanctions denied it access to foundries for its processors and it spun off some of its handset activities.
In terms of smartphone chipsets, the Omdia report places Apple in third place after the two big names, with 16% market share based on its internal sales, and then Huawei’s Kirin platform comes in fourth with 11%. In fact, Kirin lost less market share percentage than Qualcomm in 2020, down 17% compared to the US firm’s 18%.