MediaTek is going decidedly upscale. The Taiwanese company, the biggest supplier of mobile phone chips to China, was until a year ago still best known as the enabler of gray market ‘bandit phones’ that flooded Chinese and other emerging markets.Within the past year, however, MediaTek has increasingly sold its chips to top-tier international phone brands such as Samsung and LG, and expanded its repertoire to include an advanced third-generation chip for smartphones. On Tuesday it announced its next step – licensing fourth-generation LTE technology from Japan’s NTT Docomo.
Tsai Ming-kai, chairman and chief executive of MediaTek, said the agreement will provide “a smooth transition from 3G to 4G and beyond.”
The agreement helps bring MediaTek to the cutting edge of wireless chip technology on a par with Western rivals such as Qualcomm, and to diversify its sales from emerging countries, where it is already expecting explosive growth, to Japan and other mature markets.
The two companies said that besides technology licensing, MediaTek will also work with NTT Docomo in inter-operability testing and “joint worldwide marketing and technology initiative”, which suggests the future possibility of an NTT Docomo-branded 4G phone running a MediaTek chip inside.
By working with MediaTek to bolster its own-branded lineup of phones, NTT Docomo reduces the need to provide subsidies for other brands’ phones. As operators worldwide now face having to make large investments to upgrade their network to fourth-generation technology, such a model could increasingly be emulated beyond Japan – a threat to established mobile phone makers who have long relied on operator subsidies to make their phones affordable to consumers.
Separately, MediaTek’s move to LTE-PF is a blow to the Taiwan-backed, rival WiMAX standard. MediaTek already also produces a WiMAX chip, so it is unlikely to only choose one standard over another, but its announcement Tuesday marks the first time a major Taiwanese tech company has announced a move to LTE.
