"The first brother of mobile phone chips" MediaTek is high-end: taking advantage of the end-side model to challenge the Qualcomm throne

Source of this article: Times Weekly Author: Yang Lingling

Putting the AI model into the mobile phone has injected a pool of living water into the mobile phone rivers and lakes that have been silent for a long time.

Since the second half of this year, mobile phone manufacturers such as Honor, Huawei, Xiaomi, OPPO, and vivo have rushed to enter the large-scale model track and release related new mobile phone products. IDC statistics show that China's actual smartphone retail sales in the third quarter have achieved a year-on-year increase of 0.4%, and in the fourth quarter of this year, shipments are expected to usher in an inflection point, which will be the first rebound in nearly 10 quarters.

Source: Picture Worm Creative

Chip design manufacturers Qualcomm (QCOM.NASDAQ) and MediaTek (2454.TW), which regard AI capabilities as the main evolutionary direction, have also shown their muscles one after another: first, MediaTek Dimensity 9300 followed the release of Qualcomm Snapdragon 8 Gen3, and then there was Snapdragon 8 Gen3 high-frequency version information outflow, pointing directly to Dimensity 9300, and recently Snapdragon 7 Gen3 and Dimensity 8300 have been unveiled one after another.

According to Counterpoint Research data, in the third quarter of 2020, MediaTek's share of the mobile phone market surpassed Qualcomm for the first time and became the champion of smartphone processor shipments. Since then, for 12 consecutive quarters, MediaTek has continued its strong momentum and maintained the No. 1 position in the global mobile phone processor market share.

In this process, MediaTek launched the 5G brand Dimensity, and its products have continued to impact the high-end market from the Dimensity 1000 in 2019 to the Dimensity 9300 in 2023. However, compared with Apple's A series, Qualcomm's Snapdragon series, and Huawei's Kirin series, MediaTek's Dimensity series has not caused much splash in the flagship chip market.

It's an uphill battle. Zhang Yi, CEO and chief analyst of iiMedia Consulting, believes that in order to gain a firm foothold in the high-end chip market, in addition to beautiful technical parameters, it is also necessary to establish brand mentality, ecological capabilities, and collaborator relationships simultaneously, and these are not a day's work.

On December 8, in response to the flagship product Dimensity 9300 and the impact on the high-end market, a reporter from Times Weekly contacted MediaTek for an interview, but did not receive a specific reply as of press time.

The high-end market is a tiger

In the gladiatorial arena of flagship mobile phone chips, Qualcomm and MediaTek are the two players that have attracted the most attention from the outside world.

At the 2023 Snapdragon Summit held in October, Qualcomm released the third-generation Snapdragon 8 mobile platform. As the first mobile platform built for generative AI, the platform supports models running 10 billion parameters on the device side, generating up to 20 tokens per second for 7 billion parameter large language models, and generating images through Stable Diffusion on the device side in less than a second.

After less than half a month, MediaTek followed suit with the launch of the generative AI mobile chip Dimensity 9300, equipped with the new seventh-generation APU 790 AI performance engine, which can support terminals to run AI large language models with 1 billion, 7 billion, 13 billion, and up to 33 billion parameters, and can write words and graphs within 1 second.

The two major chip design manufacturers have launched flagship products on the front and back feet, and the meaning of close hand-to-hand combat is obvious. Zhang Yi told the Times Weekly reporter that MediaTek's main competitor in the process of breaking through from the low-end to the high-end is Qualcomm.

"Qualcomm has been in the flagship market for a long time, and it has advantages in terms of ecological control and brand recognition. Although the chip is not directly facing consumers, almost all terminal manufacturers will tell consumers which brand of chip it uses when selling products. Zhang Yi said.

Source: Picture Worm Creative

The data also supports this point of view, in the past three years, although MediaTek has the first market share in the mobile phone chip market, its products are mainly low-end, and the gross profit margin is low, compared with the financial report, Qualcomm's gross profit margin in the third quarter is about 55.1%, and MediaTek's gross profit margin is 47.4%.

MediaTek CFO Gu Dawei said on the third-quarter earnings call that the revenue contribution of flagship chips in 2023 will be considerable, around $1 billion. Next year will also be a year of strong growth for flagship products.

Qualcomm CFO Akash Palkhiwala also said on the earnings call that considering the upgrade of new generation products, especially the improvement of generative AI (artificial intelligence)-related capabilities, it is expected that the average price growth of mobile phone SoC (system-on-chip) is expected to maintain the trajectory of the past three years, that is, each generation of products will increase by about 10% per year.

The market share is the first, and the product parameters are on par with the Qualcomm flagship, but MediaTek still faces a lot of challenges in hitting the high-end flagship market.

MediaTek business sea ups and downs

Looking back on the development history of MediaTek, MediaTek, which started from CD-ROM chips and traveled in DVD, TV, and mobile phone chips, is closely related to the development trend of domestic consumer electronics.

Back in 2003, MediaTek, which had gained a firm foothold in the DVD chip market, fell in love with another emerging business - copycat mobile phones. MediaTek launched the first single-chip mobile phone solution, which greatly reduced the production threshold and cost of mobile phones, and gave birth to countless small-scale mobile phone manufacturers in Shenzhen.

In 2007, the National Development and Reform Commission and the Ministry of Industry and Information Technology cancelled the approval system for mobile phone production, and MediaTek took the opportunity to win 90% of the mainland mobile phone chip market, creating a market share myth in the reckless era, and was therefore named the "father of copycat mobile phones".

In the era of copycats and feature phones, MediaTek has almost no rivals. Even after the popularity of smart phones, this veteran chip design company did not miss the business opportunity.

In 2012, both the dual-core processor MT6577 and the quad-core processor MT6589 led the industry trend at that time to a certain extent and helped MediaTek successfully stand in the low-end market of smart phones.

A series of successes have also inspired MediaTek's confidence in attacking the high-end market. In 2015, MediaTek launched the high-end Helio X series, attacking the high-end market, trying to get rid of the "father of copycat mobile phones", but the results were not satisfactory.

Compared with competitors at the time, the configuration of the Helio X series was not dominant, and most mobile phone manufacturers chose to carry it on low-end models.

Until the arrival of the 5G era, MediaTek launched the new Dimensity 1000 series chips in 2019, once again trying to climb the high-end market. The performance of this chip configuration is not bad, and it has also gained the platform of many mobile phone manufacturers when it was first listed, but due to the strong performance of Qualcomm Snapdragon chips in the same period, MediaTek's high-end battle has once again returned to the top.

What really allowed MediaTek to touch the door of the high-end chip market was the Dimensity 9000, which is the world's first chip based on the 4nm process. Since then, MediaTek has successively launched 9100, 9200, 9300, etc., fully demonstrating its ambition to impact the high-end chip market.

Source: MediaTek official website

In this process, Qualcomm was not to be outdone, and launched an interception on MediaTek, and the Snapdragon series has almost become the standard configuration of Android flagships. In addition, in the high-end chip market, Apple and Samsung have also accelerated the pace of self-development.

According to a Morgan Stanley report, Apple plans to use TSMC's 3nm process chip on the iPhone 16 series in 2024, corresponding to Apple's A18 chip, and in October 2023, Samsung Electronics also demonstrated the latest Exynos 2400 processor at a public event, which is expected to be applied to Samsung's next-generation flagship Galaxy S24 series.

Huawei's return has also added a lot of uncertainty to the high-end chip market. Tianfeng Securities analyst Guo Mingchi mentioned in an analysis report on Huawei's self-developed Kirin processor that Qualcomm was the most impacted. It is expected that Qualcomm's SoC shipments to Chinese mobile phone brands in 2024 will be at least 50 million to 60 million fewer SoCs than in 2023 due to Huawei's adoption of new Kirin processors, and it is expected to decrease year by year.

"Huawei will take back some share at a certain price point, and our product portfolio spans flagship, high-end, mid-range and entry-level. Regarding Huawei's return, MediaTek CEO Cai Lixing said in the third-quarter earnings call that MediaTek's product portfolio and its performance, power consumption, leading process and user experience enable customers to compete with any market entrant.

Can AI be used to win back a city?

As a number of mobile phone manufacturers such as "Huami VO" compete to enter the large model track, Qualcomm and MediaTek also regard AI capabilities as the main evolution direction.

In an interview with a reporter from the Times Weekly, a senior executive of a mobile phone manufacturer said that the future large-scale model technology should be a combination of the cloud side and the device side. "The device-side model has the deepest understanding of users, and can interact some basic information to the cloud side, helping users to communicate the hidden consciousness behind it with the cloud-side model while protecting the privacy of personal data, so as to balance the services provided by the device-side and the cloud-side. ”

Currently, there are two options for large AI models to be connected to mobile phones: deploy them in the cloud or deploy them on the device side. At present, most of the large and lightweight models deployed by vendors on the device side are billions of large models, and those deployed in the cloud are hundreds of billions of large AI models.

Source: Picture Worm Creative

"The improvement of AI capabilities is becoming the next competitive direction for mobile phone chip manufacturers. Zhang Xiaorong, president of the Deep Science and Technology Research Institute, told the Times Weekly reporter that in the competitive landscape of high-end flagship chips, Qualcomm occupies a dominant position with its many years of layout advantages and strong brand influence. But MediaTek is also working hard to improve product performance and brand influence.

In terms of AI capability reserves, Qualcomm has paid more attention to the AI computing power of chips since the Snapdragon 8 Gen 1, among them, the AI computing power of the Snapdragon 8 Gen 1 is 9 TOPS (trillion operations per second), and the AI computing power of the Snapdragon 8 Gen 2 reaches 39 TOPS, as a comparison, the Dimensity 9200 can provide AI computing power of about 30 TOPS in the same period.

As for the latest generation of the Snapdragon 8 Gen 3, Qualcomm claims that it is the first mobile platform designed specifically for generative AI, and the most powerful and feature-rich mobile platform on the market, capable of delivering 73 TOPS of AI computing power.

At the 2023 Snapdragon Summit, Qualcomm CEO Cristiano Amon said that the third-generation Snapdragon 8 mobile platform is the first to support multi-modal general-purpose AI models, and now supports large models with 13 billion parameters.

In contrast, MediaTek's AI layout is also radical, and it has previously cooperated with Baidu, Meta and other large models to adapt, and cooperated with OPPO and other mobile phone manufacturers to promote the implementation of AI large models on the terminal, accelerating the landing and popularization of AIGC on mobile phones.

"The Dimensity 9300 further improves CPU and GPU performance, and is equipped with a powerful APU, AI processing unit, and is optimized to run large language models for generative AI. MediaTek CEO Cai Lixing said on the earnings call.

At present, vivo has carried out in-depth cooperation with Dimensity 9300 to achieve the end-to-end landing of 7 billion parameter large models on vivo's flagship mobile phone, and realize the end-to-end operation of 13 billion large models. In addition, the Dimensity 9300 has successfully run large models with up to 33 billion parameters.

Source: vivo official website

"The AI race for mobile phone chips has just begun, and there are still many unknowns about what it will evolve into in the future and what problems it can solve. Zhang Yi said that now, AI is pinned on high hopes as an important technical incision to leverage the high-end mobile phone market, and whether the Dimensity 9300 can beat the Snapdragon 8 Gen 3 to become the preferred chip for flagship mobile phones still needs to be tested by the market and time.

MediaTek's high-end breakout battle is far from over.