Communication Chips and Proprietary Chips Squeeze, Chinese Tablet Chip Companies Struggle

According to IDC data, global tablet shipments reached 43 million units in the third quarter, representing a substantial market. After consecutive declines, the quarter saw a sequential growth rate of 9.8%, which is positive news for the tablet industry.

Data released by Strategy Analytics shows that in the third quarter, Apple, Qualcomm, Intel, MediaTek, and Samsung LSI ranked as the top five players in tablet chip market share. Apple, Qualcomm, and Intel together captured nearly 70% of the market, making survival increasingly difficult for Chinese tablet chip manufacturers.

Tablet Manufacturers Develop Their Own Chips

The tablet market was propelled by Apple’s iPad, which ultimately replaced wintel’s low-cost notebook products—netbooks—and became a significant product category. Later, Android tablets gained popularity in developing countries due to their low prices, surpassing the iPad, with Shenzhen-based white-label tablet manufacturers playing a crucial role.

Currently, the top two global tablet brands are Apple and Samsung. Apple’s iPad remains unparalleled in competitiveness, which also drives its A-series processors to hold the largest market share in the tablet market. The performance of its A*X series, specifically developed for tablets, is several times higher than that of the A-series processors used in iPhones, far surpassing chips from Qualcomm, MediaTek, and other manufacturers.

As the global leader in mobile phones, Samsung has long been committed to developing its own supply chain. Naturally, chips, as a critical component, are a key focus. Combined with its advantages in hardware such as LCD panels, CMOS, and DRAM, Samsung has consistently been the second-largest tablet brand. At the end of last year, its Exynos 8890 became the first system-on-chip (SoC) with an integrated baseband, further enhancing its competitiveness in the tablet chip market and propelling it to become the fifth-largest tablet chip manufacturer.

Huawei, China’s largest and the world’s third-largest mobile phone manufacturer, is also attempting to replicate Samsung’s model. Its tablets primarily use its in-house HiSilicon chips, and its high-end phones exclusively feature HiSilicon chips. Driven by Huawei’s efforts, HiSilicon has become the world’s sixth-largest chip design company. In the tablet market, Huawei is emerging as the fifth-largest brand. IDC data shows that in the third quarter, Huawei and Amazon were the only two among the top five tablet manufacturers to achieve positive growth, while Apple, Samsung, and Lenovo all experienced year-over-year declines.

As these tablet manufacturers increasingly adopt their own chips, the market space for other chip manufacturers has significantly shrunk. IDC data indicates that Apple, Samsung, and Huawei collectively accounted for 42.2% of the tablet market share in the third quarter.

Chinese Tablet Chip Manufacturers Struggle and Seek Transformation

The rise of Chinese white-label tablets once fueled the growth of independent Chinese tablet chip manufacturers such as Rockchip, RDA Microelectronics, and Allwinner. At one point, Rockchip even became the largest tablet chip manufacturer in China by market share.

In 2014, Intel, hoping to gain a foothold in the mobile market, offered subsidies totaling billions of dollars, nearly providing chips for free to Shenzhen-based white-label tablet manufacturers. Its chips supported both Android and Windows systems, making them highly popular among these manufacturers. Within a year, Intel achieved nearly an eightfold increase in shipments, reaching 45 million units, which rapidly eroded the market share of Chinese tablet chip manufacturers.

Subsequently, Qualcomm, MediaTek, and Spreadtrum entered this market to drive shipment growth amid fierce competition in the mobile phone chip market. They could provide both application processors (AP) and chips with communication capabilities, offering larger scale and lower costs compared to independent tablet chip manufacturers, further capturing market share from Chinese tablet chip companies.

In 2015, Intel abandoned its subsidy policy, and the market share it vacated was quickly filled by Qualcomm, MediaTek, Spreadtrum, and others. However, the rise of Windows 2-in-1 tablets, strongly promoted by Microsoft, provided Intel with new opportunities (as Windows 2-in-1 tablets can only use Intel processors), allowing it to retain its position as the third-largest player in the market.

Facing development challenges, Chinese tablet chip manufacturers have pursued their own transformations. Rockchip chose to collaborate with Intel to help integrate its ATOM processors and basebands. However, after launching the XMM6321 and Sofia-3G, the Sofia LTE was delayed until this year. Due to the rapid advancements of ARM, particularly Apple’s A10 processor developed under ARM licensing, which matches the performance of Intel’s Core M, Intel decided to discontinue its low-performance ATOM processors, casting a significant shadow over Rockchip’s collaboration with Intel.

After being acquired by Tsinghua Unigroup, RDA Microelectronics’ executives announced earlier this year that the company is shifting its focus to peripheral, IoT, and digital TV chips. Allwinner stated in its recently released third-quarter financial report that it is actively expanding into personal, home, automotive, and VR product lines, targeting emerging industries such as the Internet of Vehicles, VR, and service robots to reverse the decline in the tablet market and return to moderate-to-high growth.