Qualcomm, MediaTek, and Spreadtrum Communications are all likely to see their profit margins surge in 2018 as Android phone makers become more ambitious and intensify their efforts to implement innovative apps and features into their future offerings, DigiTimes reported Wednesday, citing industry sources with knowledge of the global mobile chip industry. Increased profits are expected to rise proportionally with the average price of smartphones that has been on a decline in recent times, largely due to the fact that original equipment manufacturers decided to start undercutting one another instead of focusing on differentiating their offerings from rivaling products. That state of affairs is now set to change going forward with a growing focus on innovative features like artificial intelligence-powered services and biometric authentication mechanisms, many of which already found their way into contemporary handsets.
As the industry moves away from the low-end segment and starts putting a larger focus on premium devices with higher profit margins attached to them, so will chipmakers be able to ramp up their profits. Augmented reality is another avenue of innovation that OEMs are currently exploring and one that should additionally strengthen the upcoming trend. The shift to the fifth generation of mobile networks is also predicted to have a similar effect on the industry as the majority of 2018 flagships should already be 5G-enabled even though such networks aren’t expected to be more widely available until the second half of 2019. The world’s largest chipmakers won’t necessarily be heavily competing over the course of the next 12 months as Qualcomm appears to be placing an increased focus on the premium segment, whereas MediaTek recently dropped its high-end ambitions and is now more committed to servicing the mid-range market. Spreadtrum will be somewhere in between the two sectors as it will still invest in both but major price wars aren’t a realistic scenario, sources claim.
Qualcomm officially announced its latest high-end mobile chip in the form of the Snapdragon 845 just yesterday, stating that it expects the silicon to be in high demand over the course of the next year. That estimate not only falls in line with recent reports but is backed by the significant popularity of the company’s last premium offering. As Qualcomm Executive Vice President Cristiano Amon revealed at the Snapdragon Tech Summit which started yesterday in Maui, Hawaii, more than 120 devices powered by the Snapdragon 835 have already been commercialized or are in development and will be hitting the market shortly. As the follow-up to the 2016 chip improves on its predecessor in most aspects and phone makers become more ambitious and willing to compete in high-end segment of the market, Qualcomm is likely to see its profits increase, especially since the Snapdragon 845 is still manufactured on Samsung Foundry’s 10nm FinFET process and may hence be more affordable to produce.
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