Counterpoint: Competition intensifies, the gap between MediaTek and Qualcomm gradually narrows

Jiwei.com reported on May 15 that according to the latest report released by Counterpoint, TSMC's (TSMC) 6/7nm technology has sufficient capacity support for MediaTek, which is attributed to its market share growth in 2021. In the first half of 2022, MediaTek's next flagship 5G SoC using TSMC's 4/5nm and below will enter the high-end market. After capacity expansion and increased output, it is expected that foundry supply of AP/SoC will not be a major problem in 2022.

Image source: Counterpoint

Counterpoint believes that the competition for 5G AP/SoC will intensify further as Qualcomm appears to be more aggressive in wafer orders to maintain its leading position. By 2025, 60% of the world's smartphone AP/SoC will use foundry nodes of 5nm and below, which is one of the main driving forces for TSMC and Samsung foundries to expand their production capacity. Global foundry strategies and chipset supply and demand dynamics are shaping smartphone SoC competition.

Due to changing market dynamics, MediaTek is expected to dominate the overall smartphone chipset market in 2021, while Qualcomm is expected to occupy the same position in the fast-growing 5G smartphone chipset market. Competition has never been more intense as MediaTek has narrowed the gap with Qualcomm.

Analysts believe that the main foundry nodes for mainstream 5G smartphones are 6nm and 7nm, which provide the best performance and price for AP/SoC suppliers, hoping to more than double shipments in 2021. Since last year, MediaTek has successfully obtained TSMC's 5G chipset production capacity and turned losses into profits since 2019. This has helped MediaTek to make efforts in the mid-range 5G smartphone market with a price of less than US$250.

Counterpoint believes that MediaTek's allocation to OPPO, vivo and Xiaomi is increasing, from 20-30% in 2020 to more than 40% in 2021, with better supply prospects for these high-growth OEMs and suppliers, and their ambitions in 5G product portfolios. On the other hand, Qualcomm's chipsets were limited in the first half of 2021, directly benefiting MediaTek, which has become a zero-sum game.

Qualcomm was constrained by Samsung’s 5nm and other supporting peripheral IC production in the first half of 2021. But Qualcomm will catch up in the second half of 2021, securing higher capacity. TSMC and other foundries will improve Samsung’s supply and yield in the coming months. This will enable Qualcomm to target mainstream 5G markets primarily in China and other regions with its Snapdragon 4, 6, and 7 series chipsets. 5nm is the most advanced node, which will be used primarily for 5G high-end/flagship models in 2021. All eyes will be on Qualcomm to see if it can diversify its foundry strategy in 2022 and take some capacity share away from Apple. Apple’s A-series and M-series chips are leading in advanced node capacity share. This will help expand its lead in value/revenue, allowing Qualcomm to benefit from a better product mix and higher demand for its higher ASP Snapdragon 7 and 8 series chipsets.

Counterpoint analysis believes that looking forward to 2022, Qualcomm and MediaTek will migrate more 4nm/5nm designs. MediaTek's next-generation flagship 5g SoC will enter the SAM (service available market) with terminal equipment prices exceeding US$500, becoming a milestone for the company's smartphone chipsets.

MediaTek is likely to launch the new Tianji series products for the first time in the second half of 2021, including 5nm/6nm chipsets, and then launch new 4nm/5nm chipsets in the first half of 2022, and even 3nm first-generation products in the second half of 2022. These new products will have some new features. For MediaTek, this is a meaningful technological breakthrough, targeting the high-end market in China, and most wholesale prices are between US$400-700.

Qualcomm is expected to adopt the 4nm process on Samsung's new flagship models in 2022. Apple appears to be the leader again, migrating to 3nm at TSMC in the second half of 2022. Capacity constraints for AP/SoC may not be a major issue in 2022 compared to 2021, as the effective capacity of 5nm at both TSMC and Samsung foundries is expected to increase this year.

Counterpoint estimates that 60% of the total smartphone AP/SoCs will be manufactured in the most advanced foundry nodes (including N5, N3 and even N2) by 2025. Larger average die sizes, lower throughput due to increased EUV layers, and higher yield uncertainty beyond 3nm are likely drivers for more wafers at cutting-edge technology nodes in foundries processing more smartphone SoCs.

Image source: Counterpoint

The N5 node will significantly improve the PPA (power, performance, and area) of N7 and N10/12, and will be a long node on the foundry roadmap for most Android-based 5G SoC migrations in the next two years. The total wafer consumption of N5 (including 4nm and 5nm) will account for 25-30% of the total N5 built in the foundry industry in 2023-2024 (excluding Intel Foundry Services).