A big Taiwanese tech company you probably haven’t heard of is starting to make noise in the U.S. Based out of several hubs around the country, it is positioning itself to gain a foothold in the local market for chips used in smartphones, tablets, and wireless networks.
In recent years, Hsinchu, Taiwan-based MediaTek has opened offices in Woburn, MA; Austin, TX; San Jose, CA; and Irvine, CA. Its U.S. presence is still pretty small—just under 250 employees nationwide—but it’s growing fast. And the firm’s global resources and strategy make it one to watch if you want to know the future of mobile hardware.
MediaTek (TSE: 2454.TW) was spun out of United Microelectronics Corporation back in 1997. It originally specialized in home and consumer tech—designing computer chips for things like DVD players, TV systems, and optical storage drives. The company went public on the Taiwan Stock Exchange in 2001 and got into the mobile-handset business in the mid-2000s. Now wireless chips make up 60 to 70 percent of its overall business.
The multibillion-dollar firm is Asia’s largest chip designer, and much of its growth is from China’s booming smartphone market. Earlier this week, MediaTek said its 2013 first-quarter profit ($125 million) was up 51 percent over the same period last year. The 7,000-person company is expected to grow to about 10,000 strong with its $3.8 billion acquisition of MStar Semiconductor (also based in Hsinchu, Taiwan), which is supposed to close this summer.
Most of MediaTek’s mobile business to date has been in feature phones and low-end smartphones. But that could change quickly as more consumers (both in the U.S. and worldwide) buy higher-end phones, and as the price of devices continues to come down. Indeed, recent developments could put MediaTek on a collision course with Qualcomm and other chip giants like Intel, Broadcom, and Nvidia, in the increasingly competitive mobile market.
That’s not happening right away, at least not in North America. But if you know much about Clay Christensen’s “disruptive innovation” model—start at the low end, move up-market, and eventually take share from the big guys—this has all the hallmarks. What’s interesting is it’s a big company pulling the strings, not a startup.
But MediaTek’s U.S. offices are startup-like in scale. Its Boston-area branch has 80-plus people; many of them came over from MediaTek’s $350 million acquisition of Analog Devices’ cellular chip business in 2007. The Texas office is just north of 40 people, working on radio-frequency transceivers and CPU core optimization (more on that below). Silicon Valley has the biggest presence, with over 100 employees. And the Orange County branch is small, with about 10 people.
I recently met with Boston-area executives Finbarr Moynihan and Hong Fan (pictured above), who head up MediaTek’s international sales and marketing and global product marketing, respectively. They were pretty open about their company’s ambitions in the U.S.—and how much it needs to do to get there.
Moynihan and Fan were previously with Analog Devices, doing product marketing. Fan is a native of China, and Moynihan lived in Taiwan for two years as part of the MediaTek-Analog integration process.
As Moynihan explains, MediaTek is “historically very strong in China and emerging markets… But where we need to be, what we need to grow into, is an international global player, shipping into North America with higher-tier customers.”
That means becoming a leading supplier of
