Dialogue With General Manager Chen Guanzhou Of The Mediatek Department: To Be The "Most High-End" Mediatek "Spare No Effort" 5G And AI Road

Global CEO high-end interview series 3

In June 21st, shares of Taiwan chip company MediaTek (MediaTek) rose 1.13% to 313.5 NTD, reaching a high of nearly one year. The relatively low-key technology company's stock price was relatively "mild" before entering 2019, but it gained 36.6% of the total price. Meanwhile, Taiwan's weighted index rose by 11.07% during the same period.

At present, although the global semiconductor industry has experienced a slowdown, the landing and business of new technologies are surging. 5G and AI are also the focus. For many chip companies including MediaTek, the critical stage of validating the effectiveness of the past few years is approaching. In a dialogue with the management of the MediaTek office in Taipei, Chen Guanzhou, general manager of MediaTek, admitted to the twenty-first Century economic report reporter that 5G and AI were the largest companies in recent years.

At the beginning of this century, in the age when mobile phones were still the main function machine, MediaTek has established its position in the field of communication with the chip scheme of "Turn Key". However, as reflected in its English name "MediaTek", the company founded in 1997 was originally separated from Lianhua electronic multimedia department. Since its development, its business has been diversified and has shown strong performance in many markets.

At the 2019 Taipei Computer Exhibition (Computex), MediaTek called out the slogan of "5G leading, AI top". Chen Guanzhou used the words "spare no effort" and "no reservations" to describe the attitude of the MediaTek to new technologies such as 5G and AI.

"We are technology companies, and the most important core competency is technology." Chen Guanzhou told reporters on the twenty-first Century economic report, "we think 5G and AI are the most important twin engines of technology in the future. As a technology company, we can not be absent."

5G and AI account for the largest investment scale.

If the giant in the field of foundry and sealing and testing, such as TSMC, Rizhao and so on, represents the side of the "Taiwan semiconductor" business card, the other side is the design company represented by Lian FA Ke. According to the data collected by Chi bang, in terms of the scale of revenue in 2018, it is the fourth largest IC design company in the world, ranking first only after Broadcom, Qualcomm and NVIDIA.

From the point of view of R & D investment, it is really "spare no efforts". According to its earnings data, from 2013 to 2018, the proportion of research and development investment increased from 19% to 24%, and the investment scale was from NT $26 billion 454 million to NT $57 billion 549 million. The data compiled by IC Insights, an industry analyst, showed that in 2016 and 2017, the research and development investment of the joint research group ranked seventh in the world, and its investment share and growth rate far exceeded the average level of semiconductor manufacturers.

Compared with other industries, semiconductor industry has higher requirements for investment. For example, technology giant Apple's R & D investment in 2018 was 14 billion 236 million US dollars, accounting for 5% of revenue, while semiconductor company Qualcomm's R & D expenditure accounted for 25% of that year's revenue, to 5 billion 625 million US dollars.

Sravan Kundojjala, deputy director of Strategy Analytics mobile component technology research, once told the twenty-first Century economic analysis reporter that on average, R & D investment of a leading semiconductor company will account for 20% of revenue.

Gu Da, deputy general manager and chief financial officer (CFO) of MediaTek, told reporters on twenty-first Century economic report that he was more inclined to measure the change of R & D investment in three years as the technology industry changed rapidly. Gu pointed out that the proportion and absolute amount of investment in the joint venture research were relatively stable over the past three years, but it did increase in the 2015-2016 years, which mainly included the growth of investment in 5G and intelligent equipment. "The difficulty is that under the premise of absolute amount of stability, the shift of internal resources is very large, which is not to be seen in financial reports."

Chen Guan Zhou - Information

Chen Guanzhou told reporters on twenty-first Century economic report, "we need to manage the time of technology input and output." In addition, we need to choose the core technologies. "From the scale of investment, 5G and AI still account for the largest number."

Chen Guanzhou said that although the specific investment can not be disclosed, but the MediaTek branch from 4G to 5G transfer very rapidly, in the past year, the 5G team has reached the scale of thousands of people, accounting for more than 50% of the proportion of mobile phone operators.

Ambitious, but also steadfast in style. The most representative IC design company in Taiwan is obsessed with technology investment, but is relatively low-key and pragmatic.

This is also reflected in the release of Computex. In May 29th, MediaTek announced the launch of 5G SoC. In general, there are two ways to handle mobile phone application processors (AP) and baseband (BP), one is the plug-in of "AP+BP", the other is the SoC form that both can be packaged together. Because of its advantages in cost performance, the latter has been well received by mobile phone manufacturers.

When explaining the time point of launching 5G SoC, Gu emphasized that it depended on the choice of the company's entry point strategy instead of the technical difficulties. Currently, the 5G products shipped on the market are mostly pieces, but even Corning is willing to bet on SoC. In his view, for customers, SoC is really effective, while the effect is limited, and the meaning of promotion is more propaganda.

Chen Guanzhou said that although 5G was only commercially available in 2019, MediaTek believed that the world would enter larger businesses in 2020, with an estimated 50 million or more 5G phones. "The proposition of MediaTek is that opportunities are like this. What kind of methods do you want to seize?" Chen Guanzhou said, "5G's SoC is what we think is right."

MediaTek has focused 5G's first wave on the Sub-6 specification rather than the larger millimeter wave. Chen Guanzhou said: "millimeter wave technology we are developing continuously, this is a new specification and needs to cooperate with the whole industry, so it is more difficult." Overall, the United States is the only major area to choose 5G millimeter wave. Almost all the rest of the world focuses on Sub-6.

To be the "high-end" of 5G.

After the long distance running from 1G to 4G, there are only a few players in Qualcomm, MediaTek, Samsung, HUAWEI Hass and the new inbound runners in the 5G era. Considering that Samsung and HUAWEI chips mainly supply their own high-end products, they will be able to enter the market competition at the beginning of the 5G replacement window, mainly by Qualcomm and MediaTek.

Qualcomm continues to play a key role in the 5G era. In 2016, it launched the first generation 5G modem and launched the second generation modem in early 2019. Meanwhile, it announced that the industry's first 5G SoC will be available in the second quarter of 2019, and commercial terminals will be available in the first half of 2020.

MediaTek launched the 5G SoC at the end of May in Computex, and said it would send samples to the main users in the third quarter of 2019. The first batch of 5G terminals equipped with the mobile platform will soon be asked in the first quarter of 2020.

When it comes to whether this means that the opponent's products are more mature and excellent, Chen Guanzhou said that every company in the field of technology has its own strategy. Taking the manufacturing process as an example, not every company will pursue every generation of technology from 28nm to 7Nm, but choose the "bonus points" according to the needs. "My technology development strategy will support my product strategy and business strategy." He said, "we really did not want to be quick. What the MediaTek should grab is the opportunity to enter the business with the most competitive products."

"We need to focus our resources on the right time window." Gu said that if customers were not using their products in design, MediaTek would not publish details such as 5G SoC timetable. "The customer has the best position to judge that the product is not reliable. He can see all the plans. He has to invest resources, and this is the most practical proof."

Gu pointed out that the large number of details released from the very beginning was not the characteristic of the MediaTek. "We often have to talk about these details before customers send them." As for brand strategy, he said bluntly: "this is indeed our difficulty and our opportunity."

Taking smart speakers as an example, the market share of MediaTek in smart speaker chips is the highest in the world, but this is not well known. In the past, the customers of MediaTek were mostly from B2B, and only a few companies such as Intel chose the strategy of brand awareness in this field.

"Including, but not limited to, mobile phones, many things seem to bloom and bear fruit this year, but we have been doing duck for a long time." Gu Da said, "5G, I will not say that I have done a few generations, I will only say when to ship, which can be said to be the style of the MediaTek."

However, the arrival of new technologies such as 5G and AI has pushed the low-key chip industry to the front stage. It has become the current strategy of many chip companies to focus on R & D at the same time. This has also brought about some changes to the MediaTek. Chen Guanzhou emphasized several times that MediaTek had to make the most high-end technology of 5G SoC, bringing the best technology and consumer experience.

Gu Da also admitted: "(brand strategy) we have to work hard is part of the mobile phone. In fact, brand is highly related to products. If 5G is to make the most high-end product this time, we will make use of the product cycle and make the brand at the same time. At about the end of the year, we will have new brands coming out of 5G. "

Behind the "three carriages"

A few months ago, MediaTek carried out organizational restructuring in a low-key manner, forming three major business groups, wireless products, intelligent devices and smart home. At present, the revenue distribution of the three major business sectors is balanced, showing the trend of the three carriages going hand in hand.

Talking about how to ensure the steady growth of company performance, Chen Guanzhou believes that one of the advantages of MediaTek is that products have wide coverage and relatively diversified opportunities. In addition to the mobile phone platform, MediaTek has a good layout in many fields such as smart devices, smart home and so on. For example, in the market of smart speakers, televisions, routers and other markets, MediaTek has taken the top spot.

In 2018, Bloomberg columnist Tim Culpan pointed out that if a company found vitality in the market after "smart phone", it would be the MediaTek.

Culpan believes that it benefits from the opportunities and advantages of MediaTek in many fields including smart speakers. The data cited in this article show that three years ago, the mobile computing platform, which contained mobile phones and tablet computers, accounted for 59% of the revenues of MediaTek. According to the recent introduction of MediaTek, the sector's current revenue contribution has been 30% to 35%.

However, in the eyes of Gu Da, there is a mistake in the statement after "mobile phone". "This assumes that the cell phone is no longer growing, but in fact, 5G will cause another wave." In addition, the growth of intelligent device business is also regarded as one of the important growth points in the future. It focuses on three main directions: ASIC (customized chip), AIoT (artificial intelligence internet of things) and Auto (vehicle), which are called "3A".

Despite the current three major sectors revenue balance, but Gu pointed out that 5G related businesses, and 3A business growth is actually faster, resource investment is also somewhat tilted.

In the new business, deputy general manager of the MediaTek and general manager of the intelligent equipment business group, Jay believes that although ASIC and car business account for a small proportion of revenues, it has been in the field for 8-10 years and has reached the point of "harvesting".

For example, in the vehicle front loading market with high quality and safety requirements, it takes 4-5 years from product development to mass production, and the product life cycle will be 5-6 years - which means that there will be relatively long and stable revenue.

"This year there has been a small amount of revenue, but the main idea is long-term. Most importantly, it will be an important signal if design in can be delivered, and it can be shipped in small quantities. Gu said.

In the past 22 years of development, from the earliest optical drives, players to TV, cell phones, and now entering the AIoT, we have adopted a combination of old old teams and new teams. "Basically, this is also an innovative culture that has been breaking through from MediaTek."

This is also a culture that encourages employees to transform and accept challenges. "How to mobilize resources more timely is one thing, but the main thing is that we are unwilling to accept this challenge and build up the core technological capability step by step." Chen Guanzhou said.