Taiwanese chipmaker MediaTek has been gaining market share on its biggest rival for years. With a strong foothold in China and a focus on emerging markets, it has been able to take advantage of the spike in mobile phone sales outside of the United States and Europe in recent years to pick up ground on global leader Qualcomm.
The company is increasingly seeing opportunity in Latin America. It has made large inroads in Colombia, where it says its chips are used in more than 40% of the phones sold in the country. Mexico and Peru have also proven to be fertile ground.
Photo: “We aim to deliver the best possible technology at a reasonable price,” says Finbarr Moynihan of MediaTek, “and then, honestly, we want to then step back and let our customers innovate.” (Credit: MediaTek)
Recently, Finbarr Moynihan, general manager of international corporate sales for MediaTek, was in Colombia to meet with customers at the company’s year-end event. He sat down with Jared Wade of Finance Colombia to talk about the company’s strategy to continue its growth — in Colombia and beyond.
Finance Colombia: Can you explain your role and how MediaTek has expanded in recent years? You’ve been with the company for almost 10 years now?
Finbarr Moynihan: Yes, I came to MediaTek about nine years ago when they acquired the business from Analog Devices. Mediatek will be over $8 billion USD in revenue this year, and we have 15,000 people worldwide.
The way I tell the story of our mobile business is that we’ve said for a while that about one in three phones uses MediaTek. So of all the phones made every year in the world, about one in three uses MediaTek chips.
If you look at our businesses very broadly, I would say about two-thirds of our business is mobile — so, phones — and about one-third is what we call “home,” meaning digital TVs, set-top box, DVD players, home routers, WiFi connectivity, retail broadband, all that kind of stuff. Then also we have some businesses in Internet of Things. But, broadly, it’s two-thirds vs. one-third.
Of course, if you look at the industry, there’s also been a lot of consolidation of the chip industry, and frankly a lot of our former competitors abandoned the mobile chip business over the years. Broadcom, Marvel, and many others. So there’s been consolidation, and it’s become Qualcomm and MediaTek as number one and number two.
Finance Colombia: Qualcomm, in the United States anyway, has more brand recognition. Because of the Padres ballpark in San Diego, I’m sure. How much of a push are you making to be more known among consumers?
Finbarr Moynihan: It’s the usual reaction. We don’t have a ballpark. I think if you go to Asia and China, we’re much more well known. MediaTek’s challenge has been — and a part of the journey we’re on is — really globalizing the company.
I run the international sales organization — North America, Latin America, Asia, India, all these regions — and we’ve been growing that activity over the years and also globalizing the shipments and the customers into more high-tier global brands. Pretty much, today, every brand shipping Android phones uses MediaTek in some part of their portfolio. Some will have very high market share, some less. But Sony, LG, HTC, Alcatel, ZT, Huawei, Lenovo, Moto — they all ship with MediaTek.
Another part of our business has always been a focus on the local brands, so for us about one third of our volume ships to the local brands, as we call them. These local brands, they exist all over the world. I think they were a phenomenon that grew out of emerging markets mostly, but it’s now becoming a phenomenon in Western Europe. We are starting to see some signs of it in the U.S. market as well, and these are brands that, just by their definition, focus on a specific region,
Lanix is a good example here. Lanix operates in Mexico, Colombia, Peru, and some other local markets. Bmobile is another one. And Blu is another one.
Over time, some of them have got bigger and expanded into other regions, but that’s also been another part of our focus because they help drive the feature set for the local market. There are always aspects — features, niches, price points — that fit the local market. We think the local brands understand that better.
Finance Colombia: So you see LatAm — and specifically Colombia — as a good opportunity because there’s not such an entrenched brand loyalty necessarily? A lot of people are still buying their first smartphones.
Finbarr Moynihan: In some senses, the U.S. market is the most boring, right? It’s Apple, Samsung, maybe LG, and then it falls off a cliff very quickly. That’s changing because of some of the stuff that’s going on with the open market, with online and Amazon and retail — particularly with the carrier subsidies going away. But it’s still in its early days, right?
So what’s interesting about here — particularly in LatAm, in Mexico, in Colombia, in Peru — is that there’s a very broad, diverse range of brands that operate in the market. Some focus on the carrier channel. Some focus on the retail channel. You have a much more vibrant mix of retail and operator channels here than we do in the United States.
That also means that there’s opportunity for new brands to come in. Obviously, every brand has to find what they stand for, what they are focused on, and how they’re going to position themselves to the consumers. You have some brands that focus very closely on the operator channel, and they’ll work very closely with their carrier partners to make sure that their devices are hitting exactly the right modem-features set and the right price points. Others maybe are focused more on the retail, so they focus more on user features, design, colors, camera, display — things that a consumer will gravitate more towards when they pick up the devices.
What’s happened with Android becoming the great equalizer — and with companies like ourselves delivering what we call “turnkey reference designs” or “reference solutions” — the barrier to entry for the core technology is reduced. There’s room for people to innovate on top of that. They can ask, “what features am I going to put together in the device that is going to target the particular segment I’m going after?” Or it could be geography. It could be demographic. It could be country, retail, or operator. It depends.
But that’s created — in some markets, like Colombia — a very diverse portfolio of products that are offered to the consumer. Then the consumer picks what makes sense for his requirements or his budget or whatever the preferences might be.
Finance Colombia: So there’s the potential for a lot more creativity? There’s going to be more chance for winners and losers as opposed to the two or three big brands in the United States just doing whatever they want and people accepting it?
Finbarr Moynihan: Exactly. There are obviously socioeconomic spending-power differences between the countries as well that have a factor. But overall we like experimentation. That’s good, right?
Our approach has always been that we aim to deliver the best possible technology at a reasonable price and enable our customers to deliver at a reasonable price. I’m not saying “cheap” — but good performance for the price, and putting as much technology as we can into the different features and segments. And then honestly, we want to then step back and let our customers innovate.
We don’t prescribe what materials to use, what cameras to use, what display to use. We will deliver the same core platform to different customers, and one of them will make a phone with one feature set and another one will make something that looks completely different. Because they make different decisions. That’s how we think device diversity innovation happens. If you let it play out, the best will win.
Finance Colombia: In Colombia, what’s your market share now, and how do you see your business progressing here?
Finbarr Moynihan: Within Latin America, for us, Mexico, Colombia, and Peru are our bright spots right now. I think on the average, those economies are probably doing better than Brazil and Argentina.
Looking at Colombia, IDC estimated in the first half of this year, our market share — if you take all phones sold in Colombia — 43% of them were powered by MediaTek. That would give us the number-one share, slightly ahead of Qualcomm, which was at 41% maybe. It’s almost down the middle.
Finance Colombia: So that would make Colombia one of your best countries?
Finbarr Moynihan: Yeah. China would probably be our top market. Our share in China is probably up there — maybe 50%. But then in the U.S., our market share is in the single digits today.
Overall, I think the LatAm region is probably close to the global average, about 33%, so you can kind of tell from that. Mexico and Colombia for sure are over our average in that sense.
Finance Colombia: In addition to pure growth, what else are you focusing on now — in Colombia and beyond?
Finbarr Moynihan: Right. While market share is one metric, it’s probably not the most important metric going forward. I think the more important one is to try to grow value share and grow into higher-tier devices. So again, as these markets get more mature, people are not buying their first smartphone. They’re buying their second or third smartphone. In most cases, they’re looking to trade up. They want more features. They want more performance.
MediaTek grew from the entry space. That’s where we came from. So 2G feature phones — emerging markets — that was our entry into mobile. Now, where we’re putting a lot of focus, and where we’re putting a lot of investment, is into what we call our Helio series, our brand for our high-tier products.
We have two series, an “X” and a “P.” Helio X is kind of the flagship — extreme performance — and Helio P is one step down from that. It’s more about a balanced power/performance position. Those segments are all about delivering high-end features: displays, cameras, multimedia, graphics, computing, modem, or whatever you want to do.