MediaTek is promising smartphone buyers they will get more bang for their buck now that it plans to introduce its LTE chipsets and use ARM's upcoming 64-bit processor designs.
The semiconductor company has helped cut the cost of low-end phones and now hopes to do the same with sophisticated smartphones.
"Our take on the market is that the low-end is being pushed up and the high-end is being pushed down for a number of reasons, so what we will get is a much larger sweet spot of high-performing products at a good price," said Johan Lodenius, chief marketing officer at MediaTek.
The company is getting ready to launch its first SoCs (system-on-a-chips) with LTE. That will bring much needed competition to a sector where Qualcomm's dominance has resulted "in distorted pricing," according to Lodenius.
"We will push LTE as hard as we can. For a technology to become truly widespread, there must be products that are priced reasonably," Lodenius said.
MediaTek's entry into the market -- and to some extent products from other chip vendors -- will have a big impact on the cost of LTE smartphones, market research company CCS Insight said in a report on Tuesday. Although Qualcomm will continue to dominate LTE chip supply in the near term, the introduction of products from Broadcom, Intel, MediaTek and Spreadtrum will intensify competition next year and result in lower prices, according to CCS Insight.
At the moment, there are entry-level smartphones from well-known brands that cost about €180 (US$240) without subsidies. But by the end of next year, prices will have dropped to approximately €120 for an LTE smartphone, and below €100 during 2015, said Marina Koytcheva, director of forecasting at CCS Insight.
Qualcomm didn't immediately respond to a request for comment.
Smartphones with 64-bit processors have become a hot and contentious topic since Apple announced the iPhone 5s.
"Apple has essentially triggered an arms race to 64-bit regardless if that's something consumers will benefit from or not," said Geoff Blaber, vice president research, Americas, at CCS Insight.
To add 64-bit compatibility to its SoCs, MediaTek this week signed a deal with ARM to license the Cortex-A50 Series processor cores.
"We want to signal that we are a leading vendor in this sector," Lodenius said.
He declined to say what MediaTek plans to do with the Cortex-A57 and Cortex-A53. ARM expects the first products based on the two cores to arrive next year, according to a spokesman. The company announced them in October last year.
The Cortex-A57 is ARM's most advanced applications processor to date, while the Cortex-A53 is the most power-efficient, the company said at the time. AMD, Broadcom, Calxeda, HiSilicon, Samsung and STMicroelectronics have also licensed the new series, which will be used in smartphones, tablets and servers, according to ARM.
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