Qualcomm loses Chinese market due to sanctions
Qualcomm’s chip market share in China plummets after sanctions against Huawei, MediaTek takes the lead.
Qualcomm’s market share of Chinese smartphone chips plummets in 2020 due to US sanctions on Huawei.
As a result, Chinese mobile manufacturers have turned to alternatives like Taiwan’s MediaTek, according to CINNO Research..
China shipped 307 million so-called systems on chips (SOC) last year, down 20.8% from last year.
SOC is a type of semiconductor that contains many of the components needed to operate a device on a single chip, such as a processor. They are essential components of smartphones.
Qualcomm’s shipments to China declined 48.1% year on year, according to CINNO Research. At the same time, details on the number of Qualcomm chips shipped were not disclosed. The American giant’s share of the Chinese market dropped to 25.4% in 2020, down from 37.9% in 2019.
Part of the reason for Qualcomm’s decline in market share stems from U.S. sanctions against Huawei.
In 2019, the Chinese telecommunications giant was blacklisted by the US known as the Entity List, which restricted US firms, including Qualcomm, from exporting certain components to Huawei. Prior to that, Huawei used some Qualcomm chips in its devices..
Qualcomm said back then that export restrictions hurt its business..
The US microchip maker’s share of the Chinese market began to decline even before 2020, as Huawei continued to focus heavily on its own microchip division, HiSilicon. Huawei’s high-end devices use Kirin chips designed by Huawei and manufactured by Taiwanese TSMC.
This shift has helped HiSilicon become the number one smartphone chip manufacturer in China in the first half of 2020..
However, the US continued to pressure Huawei, and in May the Trump administration decided to cut Huawei off from supplying chips produced by TSMC. Huawei’s SOC market share drops from 37% in the first half of 2020 to 27.2% in the second half of the year.
Taiwanese company MediaTek took advantage of this pent-up demand. Chip maker exploited Huawei and Qualcomm problems and convinced major Chinese smartphone makers to use their chips.
«As far as we know, OPPO, Vivo, Xiaomi and Huawei have significantly increased MediaTek share», – said in a statement from analysts at CINNO Research CNBC.
Huawei is the largest smartphone manufacturer in China by market share, followed by Vivo, Oppo and Xiaomi.
Many of these companies make phones that are mid-priced but with high performance. This is where MediaTek is successfully gaining market share.
US sanctions against Huawei have also forced other Chinese manufacturers to seek alternatives if they find themselves cut off from supplies like Qualcomm..
«This is not only because the mid-range MediaTek platform has excellent performance, but also undeniably because the US has imposed a series of sanctions against Huawei and Hisilicon, forcing major manufacturers to seek more diversified, stable and reliable sources of supply.», – said in a press release from CINNO Research.
Xiaomi was recently added by the US to a blacklist of Chinese companies allegedly linked to military technology, although it remains unclear if this will affect its ability to procure certain components..
«After the first year of 5G adoption, let’s look at the changes in the Chinese SOC market for smartphones. This shows the market model has changed from one dominant Qualcomm in the 4G era to a three-way model by Hisilicon, Qualcomm and MediaTek in 2020.», – said in a post from CINNO Research.
Last year, Qualcomm launched a new series of 5G smartphone chips known as 6-series and 4-series, which could take MediaTek’s market share in China.
«Qualcomm Launches 5G Series 6 & 4 Chipsets To Take Share From MediaTek’s Fast Growing 5G Smartphone Segment In China», – stated Neil Shah, partner of Counterpoint Research.