According to the latest report, the price war between the major 5G mobile phone AP suppliers MediaTek and Qualcomm may start early in the second quarter of this year, when the two are expected to reduce their quotations by 5-10%, with different price reduction rates for different product lines.
The companies’ decision comes as Chinese smartphone suppliers are slowing purchases of 5G mobile phone SoCs in response to high inventory levels of 5G phones, DigiTimes reported. In order to accelerate the adoption of 5G smartphones to compensate for weak sales in the Chinese market, MediaTek and Qualcomm will have no choice but to lower 5G AP prices to ensure their shipment momentum in 2022.
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Moreover, sources said that their new 5G mobile phone AP offers may drop below $40, and flagship SoCs will have a chance to be included in lower-end models to stimulate sales, as consumers care more about mobile phones amid a poor macro environment price/performance, not functionality. Market research firm Counterpoint estimates that the ASP of 5G mobile SoCs is likely to slide to $20 by the end of 2022.
The person also pointed out that if MediaTek and Qualcomm want to maintain a certain shipment scale of Dimensity 9000 and Snapdragon 8 Gen 1, respectively, in 2022, then reducing the price of the two flagship mobile SoCs to the level of light flagships or even mid-to-high-end products will be an option to consider, although there is limited room for price reductions for both APs produced using the 4nm process.
Furthermore, the person emphasized that, based on past records, MediaTek and Qualcomm entering a price war in any given year usually means a pessimistic sales outlook for that year. The current market situation is that most Chinese suppliers have high inventory levels, with high-end 5G models having much higher inventory levels than mid-range and entry-level products.
At the same time, with the flagship phone market almost entirely dominated by Apple and Samsung, MediaTek and Qualcomm can hardly expect a good track record of flagship SoC shipments from Chinese phone suppliers, but they can try to break into Samsung’s Galaxy S series flagships model to boost shipments in 2022.
