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MediaTek Plans for the Future with an LTE IP License Agreement with NTT docomo

by Sravan Kundojjala | 7月 27, 2010

MediaTek today signed an agreement with NTT docomo to license the latter’s LTE IP. MediaTek is a significant player in the WiMax baseband market but currently lacks an LTE roadmap. The company clearly has challenges in addressing the higher-end market, but in the last year alone it has made three important moves to strengthen its position: Firstly, the company licensed W-CDMA IP from Qualcomm in 2009; secondly, the company joined the Symbian Foundation, Open Handset Alliance and also partnered with Microsoft to improve its smartphone position; and thirdly, the company is now making a move to secure its position in the LTE chipset market. We expect the LTE terminal chipset market to be highly competitive with incumbents and startups all fighting for share.

MediaTek is currently second only to Qualcomm in the cellular baseband processor market but the company could easily cede its position without significant improvements in the 3G / 4G, smartphones, tier-1 vendors and tablet areas. As we noted in a previous report, MediaTek clearly has to develop products to address tier-1 handset OEMs, smartphones, and UMTS phones. Based on our estimates, MediaTek had less than 1% share in smartphones for its integrated processors in 2009. The company currently lacks stand-alone application processor products and its current line up of integrated processors is only good enough to address entry-level smartphones. We believe that MediaTek may have to go for an acquisition to strengthen its 3G / 4G modem IP and CPU design expertise to attack the high-end smartphone and tablet markets. Without design-wins at tier-1 handset vendors it would prove difficult for MediaTek to grow its market share in these segments.

Today’s announcement is further indication that MediaTek is not prepared to rest on its strong position in the GSM/GPRS/EDGE baseband market, but is looking for long term (evolution) strategies to gain market share in future growth areas.

- Sravan Kundojjala

P.S. This announcement is in contrast to the Japanese chip vendor Renesas which partnered with Nokia to develop LTE IP recently. Previously, Renesas licensed W-CDMA IP from NTT docomo to design its basebands.

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