MediaTek has been one of the biggest success stories in the 3G smartphone and tablet markets. However, the shift to 4G LTE in China and elsewhere has challenged the company. Despite the early release of its 4G chipset, analysts say that the cost structure of MediaTek's solution is not as competitive as its SoC integrated 3G solutions have been in the past. In addition, aggressive moves in LTE by market leader Qualcomm have also made it more difficult for MediaTek to keep up in 4G. With 3G volumes declining significantly in China, this may hurt MediaTek’s bottom line.

Nevertheless, not all is doom and gloom. The company has long been a leader in low-cost phones, and the recent introduction of US$100 Android One handsets with MediaTek chipsets will likely be a boon for the company. In addition, the growth of the Indian market—where those Android One handsets were released—is likely to be a significant growth opportunity.

Outside of China, developing markets still have low 3G/4G penetration—estimated at only 25 percent—and this also suggests that MediaTek has a significant growth opportunity. Finally, even in China, where 3G growth has slowed and the overall market is reaching saturation, the decline in handset subsidies favors the low-cost focus of the company’s offerings.