Chip maker targets China's middle class

MediaTek Inc, a Taiwan-based mobile chip maker, is aiming at China's growing middle class for increased sales of mid-price smartphones and wearable devices.

"The current market structure is about to change dramatically because of the enlarging middle class population and weaker phone subsidies from carriers," said Johan Lodenius, chief marketing officer of MediaTek.

He estimated the number of users of mid-price smartphones in the market is set to triple in coming years as the global middle class nudges up to near 5 billion by 2030.

More than 65 percent of the population will come from China and other Asia Pacific economies, doubling from less than one-third in 2009.

Looking forward, the company will focus on more affordable mid-price devices, Lodenius said.

"Higher than $700 phone products are so expensive for customers," he said.

Wearable devices powered by MediaTek chips are likely to be released later this year.

The company expects to release the world's first eight-core LTE smartphone chip in the third quarter.

China is the world's largest smartphone market followed by the US, and shipped close to 300 million smart devices last year, according to Wu Lianfeng, associate vice-president of International Data Corp China.

The Chinese market will see explosive growth in smartphone and tablet sales this year, primarily through telecom operator and online channels, according to the IDC.

MediaTek has been known as a low-end mobile chip maker. It was the world's third-largest maker of chips in 2013 by shipment, following Qualcomm Inc and Broadcom Corp from the United States.

The company shipped more than 600 million smartphone chips in 2013, including 350 million for featured phones and the rest for smartphones and tablets.

Less than a month before MediaTek unveiled its attempt to enter a higher-end market, Intel Corp, maker of high-speed x86-based chips, announced it will provide cheaper products for Chinese original equipment manufacturers.

The move was believed to position the US company to gain market share.

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