Taiwan's MediaTek: Chip shortage won't stop US smartphone ambitions

MediaTek recently passed Qualcomm as the world's biggest smartphone chipset supplier. And the company doesn't see the global chipset shortage affecting the smartphone industry anytime soon.

Mike Dano, Editorial Director, 5G & Mobile Strategies

April 20, 2021

3 Min Read
Taiwan's MediaTek: Chip shortage won't stop US smartphone ambitions

The global chipset shortage has already affected a handful of companies in the 5G industry, including T-Mobile, Gogo and Infinera. However, the newly minted leader in the smartphone chipset industry isn't sweating things.

"So far it's been very good," said Patrick Wilson, VP of government relations at MediaTek USA. Wilson said Taiwan-based MediaTek does not expect the chipset shortage to affect shipments of its own products to smartphone vendors like Xiaomi and Samsung, nor does it expect the situation to affect the overall sale of smartphones – including those for shiny, new 5G networks – in the coming months.

However, after this article was published the company said it’s "working to manage ongoing supply constraints. It’s an industry wide issue and we are working closely with our foundry partners and customers to find solutions and adjust to current supply limitations until the supply chain catches up to demands."

Wilson has a unique view of the industry. He previously worked for the Semiconductor Industry Association trade association before handling government relations for Cummins, a huge supplier to the auto industry. He then spent two years at the Commerce Department during the Trump administration before joining MediaTek last year.

And he joined MediaTek at an opportune time. The company supplies chips to a variety of electronics industries but recently has been working to expand its smartphone business by selling products for all types of phones rather than just low-end devices. That strategy has apparently paid off: Taiwan's MediaTek recently passed San Diego-based Qualcomm as the world's largest supplier of chips for smartphones. Smartphones account for roughly a third of MediaTek's business.

"We're really growing a lot," Wilson said. "MediaTek – we're the No. 1 in Asia, we're the No. 1 in Indonesia, India, and the Middle East and South America – we're the No. 1 cell phone provider in all of those other regions. But in the US we're not. And so that's our ambition."

And Wilson believes the current global chipset shortage shouldn't slow MediaTek's progress. Why? "The answer is really unsatisfying because it is like 19 answers," he said.

Wilson explained that the chipset shortage doesn't involve the kind of top-line, high-end smartphone chips that MediaTek produces for its customers. MediaTek designs those chips itself and then delivers those designs to chip-construction companies like GlobalFoundries or Taiwan Semiconductor Manufacturing Co. (TSMC), which actually build the chips.

Wilson said the shortage primarily involves low-end chips and other electronic sensors that are used in gadgets ranging from automobiles to PCs. Demand for those chips has skyrocketed for a variety of reasons ranging from the US-China trade war to sudden expectations of a swift post-pandemic economic recovery. At the same time, the supply of those chips has been impacted by surprise events like a massive plant fire in Japan, freezing weather in the southern US and drought in Taiwan, as noted by the Wall Street Journal.

Of course, it remains to be seen how exactly the shortage plays out. Indeed, according to the latest research from Strategy Analytics, global smartphone shipments rose 24% year-over-year in the first quarter of 2021 – the highest growth in the space since 2015. Factors including "healthy demand of consumers with aging devices" as well as Chinese demand for 5G helped drive the industry, the firm said. But it's unclear whether the smartphone market can keep up with this kind of growth throughout 2021.

The chipset shortage will undoubtedly be a hot topic of discussion during the next few weeks as companies like Apple, Samsung, Verizon and Qualcomm report their quarterly earnings.

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

About the Author(s)

Mike Dano

Editorial Director, 5G & Mobile Strategies, Light Reading

Mike Dano is Light Reading's Editorial Director, 5G & Mobile Strategies. Mike can be reached at [email protected], @mikeddano or on LinkedIn.

Based in Denver, Mike has covered the wireless industry as a journalist for almost two decades, first at RCR Wireless News and then at FierceWireless and recalls once writing a story about the transition from black and white to color screens on cell phones.

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