In 1997, MediaTek with only 20 members was established in Hsinchu, Taiwan (China) to design integrated circuits (ICs) for home entertainment equipment.

Along with supportive policies from the Taipei government since the 70s, the city of Hsinchu then emerged as a science and technology park, where Taiwan's best semiconductor engineers who were trained in the US worked.

This was considered the golden age of Taiwan when policies, infrastructure and human resources were all favorable to turn this island into the new Silicon Valley of Asia. A small MediaTek then soon had favorable conditions to start from very small niche markets. Some 24 years later, MediaTek has grown to become the world's fourth largest IC designer with 1.5 billion devices using its chips sold globally in a year.

From disc players to phones

In the last years of the 20th century, the demand for home entertainment increased more than ever with the appearance of music players, VCD/DVD players, digital televisions, digital receivers and more. The market potential was limitless as the chipset industry (a set of integrated semiconductor chips) manufactured smaller but higher-performance, system-integrated semiconductor chips.

MediaTek realized the potential and opportunity to break into a market that was still fragmented. Along with the existing advantage that its partners like TSMC (also based in Hsinchu) had, which processed chips in large quantities, MediaTek focused on research & development of semiconductor chips to control digital entertainment devices. They moved slowly but firmly, from the CD drive on the computer to the DVD player.

The turning point came in 2004 when MediaTek entered the mobile phone market. But instead of selling SoC (system on chip) solutions that included both hardware and software to operate the device, MediaTek became the first company to sell the so-called turnkey solution.

That is, MediaTek provided customers with a prototype design to fully manufacture a phone, simply customizing the exterior design and embedding the logo. At this time, Qualcomm was still busy making 3G chips for smartphones while MediaTek focused on improving 2G chips to serve markets like China, India or Brazil.

By 2014, the semiconductor chips designed by MediaTek were used in 1,500 phone models with 700 million units sold each year. It then released the world's first 8-core 4G LTE processor in 2014.

Although it was not until mid-2019 that MediaTek began to announce 5G chipsets, competitive production costs (US$150 compared to over US$500 of its competitors) helped MediaTek quickly recapture the 5G chip market share on smartphones.

According to 2020 statistics, MediaTek officially surpassed Qualcomm to become the world's largest mobile chip manufacturer, accounting for a market share of 27.2% compared to 25% of Qualcomm.

Succeeding through niche market

Before MediaTek, the world chipset market consisted of manufacturers, designers and companies that both design and manufacture chipset. Great designers like Qualcomm always raced to come up with the latest chips and integrated the most modern technologies, and were therefore always the most expensive.

Meanwhile, Samsung or Apple designed their own chips and did not sell them to other companies.

That was the opportunity for MediaTek to jump into the mid-range market, where many manufacturers of technology equipment need to buy an inexpensive chip to make phones, televisions, routers, speakers, and smart watches for low-middle income countries.

MediaTek then designed cheap 4G 5G chips, provided to Xiaomi, Oppo, Realme and even Samsung. When the US ban prevented Huawei from accessing Qualcomm's chips, it had to turn to MediaTek.

5G and opportunities for Vietnam

The 5G era along with the IoT (Internet of Things) revolution is creating a huge market for smart devices. Designing a 5G chipset is the key to opening this door.

Viettel, Vingroup and FPT have announced their entry into the chip manufacturing research market. Vietnam has never made a chip from start to finish. But after only 3 years, Viettel could make its chipset. Viettel used more than 1,000 IT engineers and up to 300 experienced engineers for the 5G production research program and cooperated with many partners from the US, Korea, and India in the fields of chipsets and hardware and software for 5G.

A representative of FPT said that it is extremely difficult to produce chips. FPT has launched a chip production strategy with a period of 10 years and has taken cautious moves. After five years, FPT has more than 100 engineers who can design chips. Initially, FPT did not make its own chips, but only had a team of engineers to make chips for foreign partners.

A FPT representative also emphasized that 5G and IoT are a golden opportunity for Vietnam. Vietnam's microchip industry is not new, as it was formed in the 90s. In fact, most users buy phones, not chips.

"Currently, Vietnam is becoming a hub for IC design. Vietnam has more than 3,000 IC design engineers. So, the production of Made in Vietnam chips is not too far away," said a FPT representative.

Vietnamese enterprises investing in research and development of 5G chipsets for terminals is a difficult semiconductor path. But with foreign outsourcing factories already located in Vietnam, the country can control the research and development of chipsets for niche markets like MediaTek did 24 years ago.

Phuong Nguyen

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