Don't have an easy time upstream processor chip manufacturers, in the case of the mobile phone market growth slowed markedly, chip manufacturer of mobile business development also a ceiling.

According to 2016 Q2 earnings released by qualcomm, qualcomm revenue fell 19%, the second quarter among MSM chip shipments for 189 million, 233 million decreased by 19% from a year earlier, compared with the previous quarter of 242 million decreased by 22%.

Similarly, one of the biggest rivals qualcomm mediatek, Q1 earnings also shows in the first quarter of 2016 mediatek revenue of 55.91 billion new Taiwan dollars (11.14 billion yuan), decreased by 9.4% in the fourth quarter of 2015, gross margin and net profit fell, overall performance is lower than previously expected.

"This one or two years is the time when the smartphone industry the most competitive, so overall presented the gross margin and net profit slid in, belongs to the normal phenomenon." For the first quarter results, mediatek executive vice general manager and co-chief operating officer Zhu Shangzu explains, at the same time, he said, in the third quarter of this year may still there will be a small decline, but then will gradually rise.

Solid traditional business profitability

Half business derived from smartphones, downward pressure, even in the face of industry solid with both traditional business profitability is still the processor chip manufacturer first strategy. Mediatek's business interests in the first quarter rose 17.5% year-on-year, growth comes from the mobile phone business, including low-end and midrange phones, while mediatek chips is now in a state of out of stock.

Growing part of the reason comes from the Chinese mobile phone market the advent of the era of replacement, consumers seek better phone configuration, rather than a simple low-cost, with OPPO, le, cost-effective machine sales, as a representative of led chip manufacturer shipments.

In southeast Asia, India and other developing countries at the same time, 4 g is slowly instead of 3 g market, strong demand for 4 g chips in these areas, combined with the Oppo and Vivo Chinese brands such as accelerating sea, layout is Asian developing countries in the development of the market, the smart mobile phone processor market will increase.

According to Zhu Shangzu, in the first half of 2016, southeast Asia and the Indian market of smartphone overall stock increased by 10%, among them 4 g phones ratio rose to 30% from 10%.

Research and development of adaptability and high integration, low power consumption chip become stable mobile phone business in the red sea competition the only choice. In Zhu Shangzu point of view, the next phase of the smartphone is more need to save electricity rather than computing capability, so will come down the energy consumption of the chip is the focus of the next generation of product research and development.

The 10 core processors will be available at the end of the year Helio X30, using 10 nm process can reduce the energy consumption of 20% to 30%. X30 carry new graphics processor, meanwhile, will also be able to better support VR applications, not only can support mobile phone box class VR platform, can also provide technical support for the VR all-in-one.

Develop new product lines

Solid traditional business profitability at the same time, to maintain growth, the more urgent task is to develop new product lines, layout and invest in new areas, undertake to mobile phone business, cultivate new business growth point.

Mediatek recently announced plans for a $6.18 billion investment over the next five years, the development including the iot, 5 g, AR/VR, artificial intelligence, industry, car networking, 4.0 Software&Internet Service seven new chip in the field of research and development, over dependence on mobile phone chips too serious problem.

Zhu Shangzu believe in the seven areas, the Internet of things and VR or will take the lead in bring mediatek growth opportunities, and car networking, 5 g, 4.0 in areas such as industrial development opportunities will appear later.

According to Gartner data, by 2016 more than 2.5 million yuan of investment in new content networking hardware per minute, and by 2021, there will be 1 million units per hour iot equipment be purchased installation, mediatek potential market value of the natural will not sit still.

Mediatek's iot MT2503 chip platform, integrated the 2 g baseband and global satellite navigation system, mainly used in automotive products and wearable devices, and other fields, and with the recent move the Internet of the company's cooperation, to provide Internet chip platform and technical support, assist to launch all kinds of terminal products, accelerate the Internet of things development.

Although the international standard of 5 g is uncertain, but as the commanding heights of the new generation of mobile communication technology, to others and 5 g provides a corner overtaking opportunities.

Qualcomm has said recently, qualcomm 5 g commercial chip is expected to be launched in late 2018 or early 2019, the prototype products have been ready. According to industry insiders, mediatek another competitor spreadtrum is expected to launch in 2018, the experiment 5 g chip.

Mediatek Zhu Shangzu said now there are 5 g the early study of the core team are doing also teamed up with mobile operators, such as Europe and Japan for development and testing of 5 g wireless technology, recently joined China mobile joint innovation centre, 5 g 5 g technology research, testing, and business innovation. But in his view 5 g r&d need a long time, "I'm afraid lead to some difficult 2018".

Car networking is also the same problem, from product design to check often need three to five years, after the new cooperation and the four dimensional figure, mediatek has to sell its automobile electronic department to new four dimensional figure, and strategic stakes in the four dimensional figure's focus on new automatic driving, car company in the field of networking. Besides mediatek oneself also has set up a team in the related research in the field of automatic driving.

With the aid of mergers and acquisitions investment to acquire new technology, rapidly improve product added value, iconoclastic of more challenges outside of the product. How will have possession of a large number of resources, and have a certain scale and product positioning adjustment and restructuring of business, it is including mediatek enterprise transformation needed to face the problem.

"Especially in the Internet era, enterprises need to transform in the original cultural strategy, adjust the product design and manufacturing, modify the product design and development method, and update the supply chain, the company takes the lead in action would be likely to get more return on investment." PWC China TMT industry competent partner Gao Jianbin said.