The price war starts, the handset chip manufacturer life is difficult

Besides Qualcomm and MediaTek, the days of other handset-chip makers have been tough.

The former relies on technology and patent advantages, from high-end user market to the middle and low-end market expansion of the map, the latter in the 4G market to play turnkey advantage, but also quickly gain a foothold. By 2014, the two oligarchs had easily taken over 60% per cent of the market, following the introduction of 4G SOC by mainstream chip makers.

At present, the change of oligopoly has become the main theme of the 2014: from the beginning of the year, the National Development and Reform Commission began to conduct antitrust investigations against Qualcomm, to the middle of the year, the national Integrated Circuit Industry Investment fund to complete the 98.72 billion-yuan raise, are proving that domestic chip manufacturers ushered in a number of 2015, the chip market will usher in a new round of brutal competition, the rule of the fittest will accelerate the survival of the fittest. To take care of policy is only to reverse the beginning of the dilemma, the formation of a competitive situation, but also to see whether the enterprise can introduce more cost-effective products. More and more enterprises through mergers and acquisitions and cooperation to find buffer space, the effect of how to see the performance of 2015 years.

Price war begins

Handset market overall decline in sales, marketing costs increased significantly, this is the 2014 mobile phone market basic form. As the most expensive parts, external factors force the chip manufacturers to consider improving the price/performance ratio in order to get more market opportunities. According to Moore's law trajectory, in a period of time, the chip to improve performance while also to reduce costs, the industry's internal factors also let enterprises have to seek change.

So in 2014, chip manufacturers in the 4G license issued after the first time to enter the price war mode. The fierce, the participation of enterprises in the positive unprecedented.

At the beginning of the year, many chip manufacturers of the 4G Soc has not yet commercial scale. Mobile phone manufacturers want to launch products, only Qualcomm and Marvell two manufacturers of solutions to choose from. Two companies can borrow "things to dilute" the actual situation to improve product prices, but with the popularity of products early appearance, the market from high-end users to low-end users of the trend has not formed.

At the end of 2013, when the 4G licence had not yet been issued, the cool faction launched the 4G thousand machine 8720L on United Mobile. This product uses Marvell to launch the Multimode 4G single Chip PXA 1920, will cost control at the thousand level, obtains the market the positive response. Soon after, the cool faction and China Unicom launched the launch of the 4G thousand-yuan Machine cool faction K1, the latter also equipped with Qualcomm for the middle and low-end market launch of the single chip MSM8926.

Successive launch of the 4G thousand Machine cool faction, soon ushered in the 10 millionth 4G mobile phone line, and once became the domestic 4G mobile phone shipments champion; Marvell Global vice President Ding Bin said that more and more manufacturers adopt the solution PXA 1920, so that Marvell The second position of the 4G chip market continued until September 2014. "For chip manufacturers, the introduction of more cost-effective products more valuable." "An industry analyst said.

This shows that the 4G mobile phone market has just begun to compete, chip manufacturers a shot is to use the last trick. Enterprises have realized that in the acceleration of technology upgrades at the same time, the rapid reduction of production costs, is to help the handset manufacturers to gain more initiative, but also to their own to strive for greater market share to pave the ground. Therefore, the price of the tide officially set off.

In order to enhance the competitiveness of the market, even if mastering the dual advantages of technology and brand, Qualcomm is still unable to sit. Last June, sources in the supply chain said Qualcomm was slashing prices for 4G chips, mainly for entry-level 4G chips. The price of many products down to 20 U.S. dollars, the lowest or even only 10 to 15 U.S. dollars, and the upcoming 骁丽 Dragon 410, 骁丽 610, such as 64-chip prices are also below 20 U.S. dollars.

This price war, the protagonist only two companies. But after MediaTek launched the mt6595z, other handset makers were unable to sit still. The exhibition has said that it will launch the 4G solution in 2015, and eventually released 4G baseband Chip SC9620 in the third quarter of 2014. In order to avoid being forgotten by the market, the core also announced in advance five-mode chip LC1820, the progress of at least six months ahead of time.

After the mainstream chip manufacturers all the market, Qualcomm again resorted to the trick of price reduction. Since December 2014, China Telecom's 1299-yuan CDMA mobile phone, its use of Qualcomm chip prices will drop more than 4 U.S. dollars, and the same price of other mobile phone chip prices to the same level.

Market competition pressure to pass two times to reduce the price of low-end chips to protect themselves, but this phenomenon is extremely rare. Also at this time, Marvell also launched PXA1936 and PXA1908 two 64-bit 4G mobile chip, the entry-level 4G mobile phone prices to less than 500 yuan. "Chip market, price-spell strategy from the beginning of the year until the end." "A person in the industry said.
A few games

Price wars have always been linked to homogenization competition. In 2014, however, the trend was not obvious.

In technology, Qualcomm has set a new level of 4G solutions, and in price, MediaTek has been increasing the threshold for competition. The two companies, from the two dimensions of technology and price, have planned a competition code for the chip market, which eventually led to other chip makers cruising only between two standards. Rivals are not good enough, but after Qualcomm and MediaTek have upgraded their "performance" and "price" two standards to new heights, the competitive advantage has been slim.

The cruelty of the market is that when the enterprise can not put its own characteristics, in the effective time clearly displayed in front of the user, the opportunity will follow the time. After several years of following the tactics, the two leading companies, Nvidia and Bo, eventually gave up their mobile processors and baseband chips.

Speaking of the reasons for the abandonment, Nvidia CEO Huang is very frank: the rapid change in the market, as well as the price war cramped, squeezed the market a few opportunities. Decentralized business model, but also to diversify the development of the enterprise is no longer suitable for the choice of the market, so timely exit to become its most ideal choice.

For the exit of Bo Tong, the Mobile Phone China alliance Secretary General Yanhui said the lack of 4G technology reserves is the ultimate cause of its eventual launch of the mobile phone market. In the product link, Bo Tong and the price war by turns bombing, finally decided to quit. "Qualcomm is not short of money, but huge investment in exchange for the ' underachievement ' products, eventually let Qualcomm lost the initiative." "Yanhui said.

By the way, Ericsson, TI, and Freescale, who have fallen before, are getting fewer chips in the handset market. Mobile phone market is still in the implementation of the "elimination of the lowest" system, but the chip manufacturers have lost a number of leading enterprises. The huge number of mobile phone shipments, forming a huge market temptation, but in the national participation in the price war, the enterprise eventually lost the patience to continue fighting. Handset chip manufacturers have retreated, and this is becoming a market for a handful of companies.

Looking for buffers

The market competition pressure is more and more big, the enterprise also is looking for the breakthrough. There has always been an exception in the market, and that is Heiss.

In 2014, Huawei's smartphone global shipments exceeded 75 million, up more than 40% per cent year-on-year, according to data released by Huawei. Because the Heiss is Huawei handset processor "specially", therefore also obtains 40 million parts shipments. And at present, Heiss is still not facing the third party supply, Huawei is still giving Heiss "supplies", which let the development of Heiss rest assured.

This result proves that in order to avoid huge competitive pressure, save the effective force, the external help has become a necessity. Enterprises are fully aware of the importance of cooperation risk aversion, and began to actively seek foreign aid help.

Last September, Tsinghua Violet and Intel jointly announced that Intel, with 9 billion yuan (about 1.5 billion US dollars), was holding the Tsinghua Violet Group, with a 20% per cent stake in the company holding the communications and RDA Microelectronics.

In response, an industry analyst said Intel could not sit still in the face of a Qualcomm antitrust investigation. At this point, Intel has been the ideal shield; Earlier, the Purple Light has acquired RDA, two chip manufacturers began to "hold a regiment heating", and now have foreign supplies to enhance competitiveness, this is better. "This cooperation is also the two sides." "The expert said.

Also see the doorway of the joint core. The company with the patent to attract millet attention, and the latter subsidiary of Beijing Pine Cone Electronics Co., Ltd. signed the "SDR1860 Platform technology transfer contract" once the core of the millet ride, the latter 61.12 million shipments will become the core of the "insurance policy." "The goal of chip makers is to save lives by external forces, and this cooperation will continue to emerge." "said one analyst.