MediaTek is aggressively persuading China smartphone vendors to adopt its Helio P processors to reduce risks of heavy reliance on Qualcomm, whose operations might be affected by Broadcom's takeover bid, according to industry sources.

China vendors, particularly those of low-end and midrange smartphones, are closely watching the possible development and assessing the impact of the Broadcom's recent unsolicited bid to acquire Qualcomm. They are also trying to adjust downward their smartphone chip quotes and adjust order placement ratios, putting MediaTek and Qualcomm in a fierce competition for orders, the sources said.

Broadcom has claimed that if the deal becomes a reality, it will closely cooperate with global first-tier smartphone vendors to settle Qualcomm's royalty payment controversies, and will try to hike the average selling prices (ASP) of smartphone chips to boost Qualcomm's gross margins to 60%. To achieve this, Broadcom might have to quit the chip market segment plagued by fierce price competition and focus on the high-end chip market for flagship smartphone models offered by such top vendors Apple, Samsung and Huawei, the sources commented.

The sources said brand vendors dedicated to smartphones models priced under US$600 could see dwindling technical support from Qualcomm for mobile chip solutions.

This is encouraging news to MediaTek, who has zeroed in on global chip markets for low-end to midrange smartphones. The company recently reportedly convened an emergency meeting to work out new marketing strategies in the wake of the prospects facing its rival Qualcomm. MediaTek thinks Qualcomm might be mired in the takeover bid, giving a good opportunity for MediaTek to regain its market share in China, the sources said.

The sources said that players in China's smartphone supply chains are wondering whether Qualcomm will change its royalty calculation formula, and if its Snapdragon 430, 435, 625, 630 and 660 mobile platforms dedicated to support low-end and midrange smartphones will be suspended. To mitigate the possible risks, smartphone vendors are moving to diversify mobile chip supply sources, enabling MediaTek to net more orders in the first half of 2018, the sources said.