MediaTek and the battle of the budget quad cores

Last week Asian chip giant MediaTek launched its latest System on a Chip design, the 28nm quad core MT6589. Before you click on to something more interesting, here’s why it should make anyone with a mobile phone sit up and take notice.

First, MediaTek. It’s probably the most ubiquitous chip company you’ve never heard of. Asia’s biggest and the fourth largest fabless chip company by revenue globally, it lists LG, Huawei, Sony and others among its clients. Until now the firm has largely been focused on the 2G feature phone market, especially in China where demand was huge  until recently, but this announcement sees it really break out into the high end smartphone space.

The analysts I spoke to pretty unanimously agreed that MediaTek and arch rival Qualcomm between them are making a seriously disruptive play in the mobile space. Put simply, MediaTek is making quad core affordable by sticking CPU, GPU and wireless modem on the same SoC, which means the MT6589 will end up in plenty of cheap smartphones as well as some higher end ones.

The result? The big brands are going to have to differentiate on something other than quad core. In effect, as IDC analyst Teck-Zhung Wong told me, it’s going to kick off a whole new round of price competition, which is great for users and will spur the industry forward to keep on innovating, which is good for all stakeholders.

In the background there’s also the tussle between Qualcomm and MediaTek.

Qualcomm is doing amazing things this year and now sits third by revenue in IHS iSuppli’s new ranking of global chip companies. It has already produced a quad core aimed at the same market and has an advantage in its modem capabilities, which even MediaTek admitted to me. So it’s Taiwan versus the US in the battle of the budget quad cores. MediaTek historically has that huge customer base in China to tap and is likely to be faster to market but Qualcomm is catching up and apeing many of MediaTek’s technical advantages and customer relations strategies.

The jury’s out but it will be an interesting 12 months to see who the smartphone winners and losers will be.