The world's second-largest chip maker MediaTek has been scrapping the market with low prices, but now its territory is being eroded by rivals in the same way. On April 10, it was reported that Qualcomm’s share in the domestic smart phone chip market exceeded 30% in the first quarter of this year, and MediaTek’s market share fell below 40%. In the attack of Qualcomm and domestic chip makers, MediaTek, whose share was swallowed up, is still under pressure from gross margin decline. And when will its "heavy punch" be fired? The market is eroded under the "price war" The previous sharp cell phone chip pattern is changing due to the down attack of Qualcomm. One party that has been eroded is MediaTek, which has dominated the field of low-end and mid-range mobile phone chips. One of the intuitive confirmations is that the shipments of MediaTek chips in the first quarter of this year have decreased. MediaTek said at the legal briefing held on April 10 that due to fewer working days in the first quarter and the slowdown in emerging market demand, it is estimated that mobile phone plus flat chip shipments in the first quarter will be about 105 to 110 million units. Compared with the 135 to 145 million units in the previous quarter, it declined. This with MediaTek's fiery in 2016 is obviously two heavy days. Zhu Shangzu, the chief operating officer of MediaTek, stated on February 23rd that the demand for mainland domestic demand and the export smart phone market has surged since the Chinese New Year in 2016, and MediaTek has been struggling to recover orders. In 2016, it shipped nearly 500 million tablets. In addition to the low demand from mainland mobile phone manufacturers, another important reason for the loss of MediaTek's urban pool is the competition for high-end mobile phone chip market. The world's largest chip maker not only launched Xiaolong 600 series chips intended to grab low-end market share, but also learned that MediaTek has played a "price war." Cost-effectiveness was once the label of MediaTek. According to the “Huaxia Times†reporter, MediaTek first reduced chip design barriers by providing chip-plus-design solutions, but this model has now become a common practice in the industry. Analysys terminal analyst Zhao Ziming analyzed the “Huaxia Shibao†reporter. Prior to this, Qualcomm’s performance on mid-end mobile phones was relatively average and the price was relatively high. However, Qualcomm is now making adjustments in terms of prices, lowering prices compared to previous generation chips. In addition, Qualcomm’s high-end chips also showed signs of “price warsâ€. It is reported that Qualcomm's Xiaolong 835 chip will be launched on the upcoming Xiaomi 6, which is Qualcomm's most powerful chip. Qualcomm’s price for millet is 30 US dollars, equivalent to a maximum of 60%. Sun Yanxi, dean of the first mobile phone industry research institute, told the China Times reporter that in order to block opponents and let engineers familiarize themselves with their own chips, the most direct way to seize the market is the price war. Qualcomm wants to push low-end chips, as long as it is easy to sacrifice profits. Hardcore allies switch to Qualcomm With many unfavorable factors, MediaTek faces a serious problem: once its hardcore allies have switched to Qualcomm. Local mobile phone manufacturers OPPO and vivo, which are rampant in mobile phone sales, have cooperated extensively with MediaTek. Insiders told reporters that MediaTek's MT7675X midrange chip was used in large quantities by these two companies, but now they are turning to Qualcomm Snapdragon 625 and other chips. "Mainly on midrange configurations, the impact is relatively great." The choice of OPPO and vivo has a huge impact on the shipment of MediaTek chips. In the 2016 China smart phone market shipment list published by IDC, the two companies occupied the first and third positions, respectively. And to make MediaTek feel a sense of crisis, Meizu, a domestic mobile phone maker, was also won by Qualcomm. Meizu almost all of the products are using MediaTek chips, can be regarded as Qualcomm encountered in the Chinese market, the biggest "nail." Qualcomm CEO Morenkov once stated in his financial report in September last year that Qualcomm has signed licensing agreements with nine of China's top ten smartphone manufacturers. The only thing that did not sign was Meizu. However, Meizu, which the industry called “Wanmei MediaTekâ€, also signed a patent licensing agreement with Qualcomm at the end of 2016. It is said that the Meizu mobile phone equipped with a Qualcomm chip may be seen at the end of 2017. "Unplugging Meizu is to market, and naturally it is necessary to expand to this market. This is a strategic issue." Sun Yanxi told the Huaxia Times reporter. The background behind the new choice is that after the baptism of the Thousand Yuan Machine Wars, the price increase of upstream components and the demand for profitability have driven the domestic mobile phone manufacturers to transition to the mid-to-high end. In fact, Molenkov had said in September last year that the Chinese mobile phone manufacturers had increased demand for chips used in midrange machines and the company benefited. According to the latest data monitored by the first mobile phone industry research institute, the current domestic mobile phone market has an average selling price of 2,200 yuan. In this battle similar to Intel and AMD, Qualcomm, which has been affixed with high-end labels, has become a symbol of high-end mobile phone manufacturers. "The market tends to be homogenous and uses Qualcomm's chips to become one of the selling points of mobile phones. Including Meizu, they do not want to use Qualcomm's chips. They just didn't want to pay such a high price before." Sun Yanxi said. Domestic mobile phone chip pattern It is worth noting that MediaTek is facing both high-pass and domestic chip makers in the low-end market. In the two major camps of MediaTek and Qualcomm, there are many home-grown chip makers such as Ziguang's Spreadtrum and Huawei's Hass and others. Among them, Spreadtrum's fierce "price war" monopolized the entire functional machine and ultra-low-end chip market. In addition, Xiaomi is also developing its own pinecone chip. The MediaTek, which suffered two attacks, was not confined to the low-end sector. It once wanted to use the HelioX20, X25 and other chips to hit the high-end market. However, LeTV, 360 and other domestic mobile phone manufacturers have mostly used it on thousands of machines. And Helio, with high hopes for MediaTek, was plagued by yield problems. According to the "Huaxia Times" reporter, TSMC's X30 chip adopts the latest 10nm (nanometer) technology of TSMC, but its mass production is not smooth and suffers from low yield. The mature industry and fierce competition have caused MediaTek to bear tremendous pressure on the drop in gross profit margin. The first quarter 2017 financial report showed that its current cumulative revenue was NT$56,083 million, a slight increase of 0.32% year-on-year. However, its current gross margin was 34.5%. Compared to 2016, the gross profit margin of 35.6% has declined. In 2014, MediaTek's gross margin was 48.7%. Zhao Ziming believes that the failure of MediaTek's transformation to high-end is due to its own technological backwardness. He analyzed the “Huaxia Times†reporter that the strategic mistakes that Qualcomm once had on the Xiaolong 810 series chips gave other manufacturers opportunities. MediaTek is through this opportunity to spread the goods in the low-end, thereby increasing their market share. "But Qualcomm began using its own architecture from 820 last year, and compared with MediaTek's high-end chip X20, performance has taken a leading edge," he said. He also believes that it is still the technology that can solve the difficulties of MediaTek. "The better performance of the SOC (chip-level system) market is that Qualcomm and Hass are self-developed and adopt independent architectures. The chip performance will be higher than that of MediaTek. If you want to capture the high-end market, you have to work hard on R&D," he said. MediaTek is also making changes. On March 22 this year, MediaTek announced that from July 1, 2017, Cai Lixing, former chairman of Chunghwa Telecom, will serve as the company’s co-chief executive officer and group vice president. He previously served as general manager and CEO of TSMC, as well as chairman and CEO of Chunghwa Telecom. The outsiders believe that Cai Lixing’s experience in the chip field will help MediaTek to reverse the current situation. Mr. Cai Mingjie, chairman of MediaTek, has a well-known theory of “a generation of boxing championsâ€. How will the new record of MediaTek be launched? Hope not to wait until 5G arrives.