Collateral damage: MediaTek dethrones Qualcomm in world's largest smartphone market
It is believed that U.S. sanctions on Huawei are hurting Qualcomm. The Chinese giant previously used to equip some of its devices with Qualcomm's chips. When the US began its crackdown, Huawei intensified its focus on its chipmaking arm HiSilicon and this made the subsidiary the number one smartphone chip provider in China in the first half of 2020.
New restrictions virtually paralyzed HiSilicon and Huawei then turned to MediaTek. As a precautionary measure, other Chinese players such as Vivo, Oppo, and Xiaomi also started gravitating toward the Taiwanese chipmaker.
It now appears that these companies were right to be worried, as Xiaomi was added to a U.S. blacklist recently over suspected ties with Chinese military companies. The share of MediaTek chips in the company's phones has increased by more than three times when compared to the same period last year.
MediaTek chips are also believed to cost less than Qualcomm's chip, which makes them a good fit for domestic players' strategy of making reasonably priced high-specced phones.
Per Counterpoint Research, MediaTek overtook Qualcomm as the world's biggest smartphone chip vendor in Q3 2020, largely because of its popularity in the $100-$250 price category and growth in large markets like China and India. Qualcomm was the biggest 5G chipset provider during the quarter. The company was forecasted to reclaim the top position in Q4 on the back of strong demand for 5G-enabled smartphones.