Qualcomm's top management has faced down a number of high-profile threats in recent years. There was the 2017 antitrust lawsuit filed against Qualcomm by the Federal Trade Commission, which the company successfully appealed. Then there was the hostile Broadcom takeover in 2018 that was blocked by the Trump administration. And then there was the standoff with Apple that ultimately ended in 2019 with the iPhone vendor as a Qualcomm customer.

And that doesn't even cover Qualcomm's proposed $47 billion acquisition of NXP that was eventually scuttled by Chinese regulators.

Now, the San Diego-based chipmaker might be in for the fight of its life amid an upsurge by Taiwan's MediaTek in Qualcomm's home market of the US.

"In the US, Qualcomm has been somewhat insulated, but that is changing," said analyst Avi Greengart with Techsponential.

From Taiwan to San Diego

The story of MediaTek's invasion of Qualcomm's home base covers almost three decades of work. The company was founded almost 30 years ago making chips for DVDs and other media equipment. Over the intervening years, the company expanded into a number of markets, including IoT gadgets and phones. In the 4G era, MediaTek managed to build a solid business in low-cost smartphones for markets including Asia.

But MediaTek's management decided to bet heavily on the transition to 5G. The company poured billions of dollars into its 5G development efforts – and in 2020 those efforts bore fruit. On a global scale, MediaTek passed Qualcomm as the world's largest supplier of chips for smartphones, with 27% of the market to Qualcomm's 25%.

"However, much of that growth has been driven by factors not well aligned to success in the US, namely, phones that don't support mmWave [millimeter wave spectrum] and growth by its customers at the expense of Huawei, which has never been a factor domestically," explained analyst Ross Rubin with Reticle Research. He said MediaTek has mainly focused on international 5G networks below 6GHz – a wise move considering the US remains the only market in the world that has heavily focused on 5G in the higher, mmWave spectrum bands.

Moreover, the US government's ban on Huawei helped to drive business to MediaTek, primarily in China.

An A32 up its sleeve

Now, though, MediaTek is positioning itself to directly attack Qualcomm in the US market. It certainly has the wind at its back: The company reported that its first-quarter revenues from phones grew 149% year-over-year and 32% sequentially. Overall, MediaTek is predicting 40% growth this year, with phones accounting for more than half of its revenues.

"MediaTek is certainly a competitive threat to Qualcomm in the US," agreed Greengart of Techsponential.

A major step into Qualcomm's arena occurred earlier this year when Samsung announced its Galaxy A series of smartphones, some of which were powered by MediaTek chips. T-Mobile positioned Samsung's Galaxy A32 as the centerpiece of its "5G for All" announcement last month, despite the fact that it's missing mmWave 5G.

And MediaTek is working to patch that hole in its strategy. Company officials have promised mmWave 5G products in the coming months alongside a focus on the top-tier portion of the market where Qualcomm has made its nest.

What's Qualcomm's response? According to Rubin, the company may be readying much faster chips leveraging the technology it recently acquired from Nuvia. Qualcomm – battle scarred as it is – may not be done yet.

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano