Qualcomm and MediaTek plan to cut another 30% in 5G chip orders in the second half of 2022 due to a decline in orders from Chinese phone makers, according to Ming-Chi Kuo, an analyst at TF International Securities and a frequent Apple supply chain news commentator, wrote in a May 22 report.

Why it matters: Weak demand in the Chinese smartphone market has resulted in domestic phone makers cutting orders, causing a ripple effect in the industry. Additionally, android phones are using processors one or two generations behind Apple, making them face a long uphill battle in China.

Details: Qualcomm and MediaTek, two of the world’s largest system-on-a-chip (SoC) makers, have reportedly been forced to cut orders after Chinese phone brands had to cut smartphone orders as a result of Covid-19 lockdowns across China and weak demand for smartphones.

  • Kuo surveyed major Chinese Android phone brands, including Xiaomi, Oppo, Vivo, Transsion, and Honor, finding that they had cut another 100 million orders since his last survey on March 31. 
  • Kuo’s survey also showed that Taiwan-based MediaTek has cut orders for the fourth quarter of this year by 30%-35%, with those mainly focused on mid-to-low-end chips. Additionally, Qualcomm cut orders of its high-end Snapdragon 8 series by about 10%-15% for the second half of 2022.
  • Kuo explained that the performance of 5G chips can be seen as a long-term indicator of the strength of the smartphone industry. Due to the longer lead-time needed for 5G chips, declining orders indicate that the Chinese smartphone market will remain muted during the peak season of the third and fourth quarters and won’t see a comeback till the first quarter of 2023.
  • Louis Liu, an analyst from CINNO Research, told TechNode a similarly pessimistic prediction and believes that smartphone sales in China would drop by 7%-8% this year.

Context: China shipped 17.6 million smartphone units in April, a yearly decline of 21.6% and 12.2% less from March. The decline can be attributed to a drop in market demand and less promising processors for Android phones compared to Apple’s, according to a report from CINNO Research.

  • Apple, on the contrary, remains relatively strong in the Chinese market due to the US company’s processors being two generations ahead of those supplied by Qualcomm and MediaTek.

Ward Zhou

Ward Zhou is a tech reporter based in Shanghai. He covers stories about industry of digital content, hardware, and anything geek. Reach him at ward.zhou[a]technode.com.