…And so the race to the bottom begins……
SAN FRANCISCO (Reuters) – Qualcomm Inc, the world leader in smartphone microchips, may want to shore up its defensive tactics.
Taiwan’s MediaTek Inc, the leading chip supplier for Chinese smartphones, is barreling into the U.S. market with a new major global branding campaign and setting up shop in San Diego, California, home to Qualcomm.
This year, MediaTek plans to hire about 150 engineers, business development and marketing staff in the United States, adding to a 300-strong U.S. workforce, said Kristin Taylor, MediaTek’s vice president of U.S. corporate marketing. Outside the United States, the company plans to add 1,000 employees in 2014, increasing its ranks by around 10 percent.
“We really feel that it’s a strategic area,” she said of San Diego’s Sorrento Valley, where MediaTek plans to open its new office in the next few months. It is home to many technology companies clustered around Qualcomm, one of the city’s largest employers.
“A lot of our technology partners sit in that area and we want to be able to serve them,” said Taylor, a former Qualcomm veteran who joined MediaTek last year.
MediaTek is relatively unknown outside Asia, where it has grown in the past decade to become the dominant supplier of low-cost cellphone chips, instrumental in helping companies such as China’s Xiaomi and South Korea’s LG Electronics Inc produce handsets that sell for less than $100 each.
MediaTek plans this month to launch a rebranding campaign highlighting its expansion beyond China and into the United States and other developed markets led by Qualcomm.
“We need to redefine that we really are at this point serving the entire globe and not just small pockets of the world,” Taylor said. She declined to give more details ahead of its launch.
Lacking relationships with U.S. phone carriers, MediaTek is unlikely to challenge Qualcomm’s command of the high-end phone market soon, analysts said. In the mid- and low-tier categories, the Taiwanese company’s ability to produce chips very cheaply is giving it an edge over other U.S. players like Broadcom Corp, Nvidia Corp and even Intel Corp, which are all trying to compete with Qualcomm.
MediaTek, whose stock market value of $18 billion surpasses Broadcom and Nvidia, far outsells Qualcomm in handsets aimed at Chinese consumers but it supplies processors for less than 3 percent of smartphones sold in the United States, according to Strategy Analytics analyst Sravan Kundojjala.
MediaTek believes its future chips will help manufactures make cheap phones that can compete in quality against more expensive devices made with Qualcomm’s components.
