Taiwan strategy seen making low-end phones even cheaper

Low-cost chips could bring down feature phone prices to as little as $40, a lift for users in China and India

A little-known Taiwanese semiconductor firm's ambitious plan to grow mobile phone semiconductor sales in China this year foreshadows what analysts see as boom in low-end handsets not only in the world's largest market but also in other countries where not everyone wants an iPhone.

MStar Semiconductor anticipates a boom in its handset chips by the second half of the year as the 9-year-old firm uses a rack of patents and its traditional made-in-Taiwan edge: low manufacturing costs that translate to lower prices for end users. That business will target China and "get big" this year, said Angela Luan, assistant to the CFO.

Poorer countries such as China and India, where young populations need phones but cannot always afford the latest US$300-$750 model, as well as wealthier regions of East Asia, where older people do not always want to master smartphones, are expected to increase demand for basic handsets.

It's no surprise that LG Electronics, Nokia, Samsung and smaller local handset makers are already making a move into the market, analysts say. Chip makers MStar and its Taiwan rival MediaTek are positioned to sell chips to non-branded makers of low-end phones.

"That’s a growth business and capitalizes on a huge market to fulfill basic needs," said Wai Ho Leong, regional economist with Barclays Capital in Singapore. "The market is growing explosively. A perception is that low end means not profitable, but that’s not true."

Mobile phone semiconductors now make up about 5 percent of MStar's revenue, the rest coming mostly from chips for monitors and digital displays.

Mediatek and MStar hold costs down by producing in bulk after perfecting a technology, a development process that so far has kept the field small, said a section chief with the Taiwan economic ministry's Industrial Development Bureau surnamed Tsai. "There's a definite level of difficulty, so not just any small company can break in," he said.

Those savings will translate into cheaper new phones, including feature phones with music players and cameras. Some handsets would cost as little as $40-$50 each, as consumers in less developed countries cannot afford much more, said Peng Chien-hang, an analyst with DigiTimes Research in Taipei.

China is a logical starting point because of its size. "It's the number one in terms of volumes," said Duncan Clark, chairman of the BDA China consultancy in Beijing.

Chinese mobile phone users number more than 800 million but because the country is relatively poor they have shunned more expensive 3G services and smartphones that cost more than US$300 apiece. Mobile phone users in India totalled about 750 million this month, with 100 million in rural areas.

MStar is set to release chips for non-3G Android phones, feature phones and smartphones, Luan said. It will seek the rights from Google for the Android phones, she said. Worldwide shipments of MStar mobile phone products are forecast to grow 40 to 50 percent this quarter versus the final three months of 2010.

As of 2009, chips from the larger MediaTek already powered most mobile phones in China. The firm has already stared pushing new chips with support for an application download store aimed at Chinese mobile subscribers.

Indeed, MediaTek has been behind a drop in mobile phone prices in China overall, and it's market share in the country has drawn partnerships with technology giants including Microsoft and Google.

Fresh competition with MStar should continue the drive to lower prices and better handsets for users throughout the developing world.

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags Phonesconsumer electronicsMobile handsetsMediaTekMStar Semiconductor

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Ralph Jennings

IDG News Service
Show Comments

Brand Post

Bitdefender 2019

Taking cybersecurity to the highest level and order now for a special discount on the world’s most awarded and trusted cybersecurity. Be aware without a care!

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Luke Hill


I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?