According to the market research firm Counterpoint, MediaTek and Qualcomm will lead the 5G chipset market in 2021. While Qualcomm will lead the segment with a 30% market share, MediaTek will trail behind with 28%. In China, the world’s largest 5G smartphone market, MediaTek’s share of 5G chipset might reach 50%, according to some estimations.
Two Chinese challengers with the same root
However, now there are new players in the Chinese market. Unisoc, a subsidiary of the gigantic Chinese semiconductor conglomerate Tsinghua Unigroup, and ASR Microelectronics are both planning for IPOs on China’s Shanghai Stock Exchange STAR Market, officially known as the Shanghai Stock Exchange Science and Technology Innovation Board.
Their emergence also points to how Chinese state capitalism is utilizing both state and market mechanisms to hasten the creation of national champions, especially in the context of the US-China tech war. The intention to create the STAR Market itself was proclaimed by Xi Jingping less than three years ago, and it took merely 8 months from scratch to completion. The STAR Market distinguishes itself for its lax reviewing process to speed up IPOs.
Unisoc’s IPO is expected at the end of this year, while ASR’s application has passed the first stage of review. In fact, the two companies have a mutual root in RDA Microelectronics, a formerly NASDAQ-listed Chinese company specializing in RF semiconductors. Tsinghua Unigroup acquired RDA in 2013 and later merged it with another NASDAQ-listed Chinese semiconductor company, Spreadtrum Communications. The merger became Unisoc.
RDA’s founder, Vincent Tai, later founded ASR in 2015. Currently, Alibaba and Xiaomi are among its investors, with the former acquiring a 17.15% share. In 2017, ASR acquired the mobile business unit from Marvell Technology Group, an American semiconductor company. It represented a key milestone as ASR took over Marvell’s baseband R&D team, baseband-related intellectual properties and its clients. ASR has revealed in its IPO application that its 5G chips have already entered tape-out and are scheduled for volume production at the end of this year or in early 2022.
China’s Plan B for chip autonomy
Unisoc’s chance came when HiSilicon, Huawei’s chip design subsidiary, fell under US sanctions and China needed a Plan B for its chip autonomy project. However, Unisoc had been severely lagging behind HiSilicon in terms of capability, trapped by a long development cycle that produced chips always 8 to 15 years behind the industry’s leading players. Consequently, China’s flagship policy fund, the China IC Industry Investment Fund (aka the Big Fund), poured in CNY 2.2 billion to Unisoc last year. It also marked the first investment of the Big Fund’s 2nd phase.
The Big Fund and the STAR Market will be two main fixtures of China’s semiconductor policy, representing how state and market mechanisms coordinate in conjunction to support industrial champions. The Big Fund’s primary role is to stimulate additional investments from private and semi-private sectors, while IPOs on the STAR Market is the ultimate goal.
Apart from the financial help of the Big Fund, Unisoc’s CEO, Steve Chu, also played a key role in radically reforming the chaotic company after he obtained the post in 2018. In 2019, Unisoc unveiled its first 5G baseband processor, V510. It was followed by T7510 and T7520 in 2020, supposedly narrowing Unisoc’s gap with industry leaders to within 6 months.
In this year, the Tanggula series of 5G processors were unveiled, revamping the previous generation of chips. The former T7510 and T7520 will be respectively remade into T740 and T770. In addition, T770 will enter volume production in July, using TSMC’s 6nm process. It is also the world’s first 5G chip manufactured at 6nm.
Adoption by major Chinese phone makers is the key
Counterpoint indicates that Unisoc will capture 6% of the smartphone chipset market in 2021. Previously, Unisoc chips targeted the mid and low-end market, but since Unisoc’s T610 4G chips were adopted by Huawei’s Honor 20 phones, other Chinese handset OEMS have become increasingly receptive to Unisoc chips.
Given Unisoc’s status as a HiSilicon alternative, however, one cannot rule out the possibility that Chinese industrial policy might indirectly require domestic mobile phone makers to use Unisoc’s 5G chips in the future.