MediaTek sold nearly as many smartphone chips as Qualcomm in Q2

MediaTek sold nearly as many smartphone chips as Qualcomm in Q2
The smartphone application processor (AP) market contracted 26 percent in Q2 202, claims Counterpoint Research.

As the analytic firm points out, the decline is hardly surprising and coincided with reduced smartphone sales, which were brought on by the pandemic.

Qualcomm remained the dominant player with 29 percent of the market, which is 3 percent lower when compared to the same period last year. 

Per the research firm, Qualcomm woes have more to do with Huawei than the virus outbreak. During the second quarter of the year, Huawei surpassed Samsung to become the number one smartphone vendor and since most of its phones feature in-house Kirin chips, it's no wonder that Qualcomm saw its share decline. 

The company's ability to use Qualcomm-made chips was also impacted by US restrictions, which led to a decline in the chip maker's share in Huawei and Honor phones.

Per estimates, only 3 percent of Huawei's phones sold in Q2 2020 featured a chip made by Qualcomm. In Q2 2019, the figure stood at 12 percent.

Overall, Huawei's chip-making subsidiary had 16 percent of the market during the second quarter, which put it behind MediaTek which had a share of 26 percent. 

Outlook is positive for the chip market

As smartphone sales bounce back, so will the chipset market, and Counterpoint is already seeing signs of that. Since the US seems to be in no mood to give some breathing room to Huawei, its shipments are bound to go down and this is expected to benefit Qualcomm, MediaTek, and Unisoc.

Huawei's smartphone sales could fall as much as 75 percent next year. Without the proprietary Kirin chips, it stands to lose its competitive edge in China where is it concentrating most of its efforts at the moment as the rest of the world has kind of shut it out.

Per today's report, OPPO, Vivo, Realme, and Xiaomi will steal Huawei's market share in the short term and this will boost demand for Qualcomm's mid-tier and high-end offerings in China and Europe, and MediaTek's mid-range and entry-level solutions in Russia, Middle East, and Africa.

Looking at the fresh data, it looks like MediaTek is narrowing the gap with Qualcomm. The later has been increasing the price of its flagship chips since the last two years and analysts believe Samsung is looking to capitalize on that by positioning its Exynos silicon as an affordable alternative.

Currently, it has a market share of 13 percent.  

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Overall, the AP market is expected to grow in the next three years, thanks to the rollout of 5G networks. 5G-enabled smartphones actually registered a quarterly growth of 126 percent in Q2. 

The next-gen of cellular connectivity is also expected to drive demand for affordable gaming-centric phones, which are projected to grow a whopping 1011 percent this year.

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