While MediaTek chipsets have seen a rise in demand, supply constraints and the global semiconductor shortage have made them short in supply. And Now, the company is following other chipmakers and is apparently raising the prices of its processors as well.

According to a UDN report, the Taiwanese chipmaking giant is raising the prices for some of its smartphone chips that are in high demand this month. The bump in prices are as high as 15 percent, so the company is also expected to see stronger performance and higher profits due to the robust momentum. Unfortunately, the company did not offer any comments on its chip price hike, although, sources close to the matter confirmed that MediaTek has raise the prices of smartphone processors.

The sources stated that 4G LTE enabled chips saw a sharp price rise since the primary focus of chipmaker’s is usually the 5G smartphone market. 4G chips now hold a smaller stake in the market but demand for 4G smartphones is still high in markets such as India where 5G networking is still not commercialized. Furthermore, the order of 4G handsets have caused the supply of LTE enabled phones to surpass the demand. Similarly, the brand’s rival, Qualcomm, is also expected to raise the prices of its chipsets, although, this has yet to be confirmed.

The rise in prices of MediaTek processors is as high as 15 percent for 4G chips and 5 percent for 5G enabled chips. The primary reason for the hike in price is due to the increase cost of production from TSMC’s foundry. Previously, the company had also raised the prices of its WiFi chips by about 20 percent as well while we had also reported on other foundries like Samsung raising their prices.

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With 5G being the new trend in the smartphone industry, more and more OEMs are adopting the newer and faster bandwidth for their handset offerings from different segments. Despite this, 4G LTE enabled smartphones are still more popular and see higher sales and, due to supply constraints, many 4G chips from MediaTek to be out of stock until the end of 2020.

According to a UDN report, MediaTek’s supply for many of its 4G mobile chip has run dry and the restock will arrive only by 2021. The lack of supply is also indicative of the chipmaker’s focus on 5G chips, which has become popular in the current market in 2020. At the moment, the company has yet to comment on this matter but it is already known that its Dimensity chips have seen a rise in orders in the past quarter.

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TrendForce, a known research based firm, also pointed out that the inclusion of Apple into the 5G market will boost the reach of 5G smartphones in multiple markets. Previously, we had even reported on another analysis from TrendForce that projected that Apple and Huawei will be the market leaders of the 5G market in 2020, especially in the second half of 2020. Ever since Huawei lost TSMC for chip supply, 5G Dimensity chips from MediaTek have also seen increased orders.

Although, while 5G chips have become increasingly more popular, 4G handsets are still preferred by consumers and have dominance in the market. One of the reasons for the shortage stems from the company’s supply chain, coupled with a lack of power management ICs. Thus, the supply for low end MediaTek chips are in short supply till the end of this year.

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Qualcomm has always taken the lead in chip shipment in the Chinese mainland market, but analyst Pan Jiutang posted on his Weibo page that for the second quarter of this year Mediatek has claimed the top spot thanks to the success of the Helio series (save for the weak performance of the Helio  P20 which has  cost them OPPO and Vivo’s order) and more sales from online and offline brands.

But the increase in shipments is not being celebrated as the company’s gross margin has dropped to its lowest level (35%) in a decade. The company is still facing issues with regards to performance, process, and average selling price. They are also still dealing with supply issues which will still show up in the second half of the year.

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Mediatek also needs to make sure they have a major breakthrough in the high-end market come 2017 or else that share of the market will be fully owned by Qualcomm.

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