Beating Qualcomm and Samsung Electronics

Market shares of major AP makers in the third quarter of 2020

A big change was made in the global smartphone application processor (AP) market in the third quarter of this year. Taiwan's fabless company MediaTek beat Qualcomm of the United States to rank first in the global AP market. Samsung Electronics, which produces the Exynos AP, saw its market share drop by four percentage points on year. It shared the third place with Apple and HiSilicon.

Counterpoint Research, a market research company, announced on Dec. 24 that MediaTek became the world's No. 1 smartphone AP producer for the first time in the third quarter of 2020. MediaTek's share stood at 31 percent, followed by Qualcomm with 29 percent. Samsung Electronics, Apple and HiSilicon each posted 13 percent. In the third quarter of 2019, Qualcomm finished first with 31 percent, MediaTek second with 26 percent, Samsung Electronics third with 16 percent, HiSilicon fourth with 12 percent and Apple fifth with 11 percent. In the second quarter of this year, Qualcomm ranked first with 29 percent, followed by MediaTek with 26 percent.

MediaTek is a Taiwanese fabless company founded in 1997. Until now, the company has mainly employed the strategy of small profits and quick returns (SPQR). Under the strategy, it sells low- and medium-priced APs to Chinese companies.

MediaTek's surprising No. 1 debut in the third quarter reflects some recent changes in the landscape of the smartphone market. First of all, the fall of Huawei. The company’s share in the global smartphone market fell to around 14 percent in the third quarter due to tough U.S. export regulations, according to Counterpoint Research. Chinese smartphone makers such as Xiaomi, Oppo, and Vivo are taking some of Huawei's share. In the third quarter, Xiaomi posted a 13 percent share, closely trailing Huawei. Oppo (8 percent) and Vivo (8 percent) also broke into the world's top-five club.

Huawei mainly used Kirin AP developed by its subsidiary HiSilicon, but Xiaomi, Oppo, and Vivo do not produce their own APs. They use APs from specialized companies. As Xiaomi, Oppo, and Vivo mainly produce budget phones, they partnered with Taiwan's MediaTek, which focuses on low- and medium-priced APs.

Samsung Electronics, which competes with Chinese companies in India and Latin America where medium- and low-priced phones are popular, is also using chips from MediaTek to secure profitability. The Galaxy A31 model is a case in point. The smartphone is powered by MediaTek's Helio P65 AP.

Another reason for the growth of MediaTek’s market share is its active release of APs for budget 5G smartphone models. Like Qualcomm's Snapdragon, Apple’s A, Samsung Electronics' Exynos, and HiSilicon's Kirin, MediaTek has its own AP brand. Its brand for low-end APs is Helio., while that for premium APs is Dimensity. Demencity 1000, a 5G AP, is the main product. MediaTek is targeting the 5G smartphone market with Dimencity APs.

Recently, Chinese companies such as Xiaomi, Oppo, Vivo, and Realmi are aggressively releasing 5G smartphones. These smartphone companies mainly use Qualcomm's Snapdragon APs for premium products and MediaTek's Dimencity APs for general products.

MediaTek's business performance is on the uptick. Its sales in the third quarter amounted to US$3.3 billion, up 53.2 percent from US$2.154 billion in the third quarter of 2019, TrendForce said. Its sales growth eclipsed that of Qualcomm (37.6 percent) during the same period.

MediaTek’s improving performance spells problems for the System LSI Business Division at Samsung Electronics that develops and sells the Exynos APs. For Samsung, Xiaomi, Oppo, and Vivo are customers that it cannot give up.


Samsung Electronics is enjoying positive results in its business with Vivo. Samsung supplied the Exynos 980 AP to Vivo for its X30 smartphone in 2019. It recently released the Exynos 1080 AP, which will go into Vivo's 5G smartphone X60 scheduled to go on sale on Dec. 29.

However, it is a different story when it comes to Xiaomi and Oppo. The company announced in October that it would supply the Exynos APs to Xiaomi and Oppo in 2021. But no supply deal has been announced yet.

Recently, some analysts say that Samsung Electronics has changed its smartphone AP strategy from expanding sales to other companies to development of high-end chips for its own use. The System LSI Business Division in charge of selllng the Exynos APs to other companies is trying to ramp up sales and profit margin by increasing external sales, but other business divisions at Samsung want the company to focus on developing premium APs exclusively for its own smartphones, as Apple does. Apple develops APs on its own, outsources production to foundry companies such as TSMC, and uses the APs only for the iPhone.

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