| Introduction:
Mingto Yu
Education Background: MBA in Wharton School of University
of Pennsylvania, USA
Working Experience: Finance Manager of Taiwan Semiconductor
Manufacturing Company Limited
Current Position: General Manager of Great
China Region, MediaTek; Director of Alpha Imaging Technology,
and Director of PixArt Imaging Inc.
Interview Foreword:
- It has been the legend of rapid growth among IC design
companies,
- It has made terminal manufacturers love and hate,
- Is its success coincident or the representative of
knowledge-intensive Hi-Tech industry?
- After its rapid rising, can it continue to work on
its success legend?
-----After the ¡°Adult Ceremony¡± of acquiring
ADI, let¡¯s see how MediaTek will continue its industry legend¡¡?
Interview:
Wang Jing: Presently there is an interview series under
the cooperation of TD forum and Sina.com, we chose some
influential companies in the TD-SCDMA value chain and I
will interact with the executives of these companies, to
help readers have a good knowledge of the general situation
of these companies, especially their thoughts and plans
on TD-SCDMA. We have interviewed with one or two companies
and Potevio is the first. MediaTek (MTK) is the first chip
manufacturer in this interview series. First, I noticed
that MediaTek joined the TD Forum not long ago, as our senior
member, so we come here visit. Second, MediaTek announced
the acquisition of ADI in around September. ADI is also
our senior member, and this matter has much to do with one
of our core company Datang, therefore the industry pays
much attention to it. Today I want to consult Mr. Yu by
this chance on the general situation of MediaTek and your
strategic consideration on TD.
Talk from purchasing ADI
Wang Jing: MediaTek does well in China¡¯s 2G market and occupies
a big share in the domestic market. As an industry, we are
glad to see that your company entered TD chip field. It
is something that we have appealed all the time to have
a competent company in our TD standard. And this industry
will be great only if excellent team participate, especially
on terminal chips. It is a great issue that MTK plays a
positive impetus role as a great company familiar with China
market and as a company of Chinese people. Would you please
introduce the situation on purchasing ADI first?
Mingto Yu: OK! Actually purchasing ADI began from the introduction
of investment bank. They mentioned around April and May
that ADI planed to split mobile chip business. Because for
ADI, mobile chip occupied probably 10% of their business,
which was not so much, but investment developing demand
in future was very big. For the whole strategy objective
of ADI, they surely hoped to revert to its original simulator
business and wanted to divide out mobile chip section. Therefore
they searched for appropriate buyers outside by its investment
bank, we began get in touch with them and it felt good at
the beginning. On ADI side, our evaluation included TD-SCDMA.
They entered TD field earliest and therefore all the plans
were pretty mature.
Wang Jing: That is because they cooperated with Datang.
Mingto Yu: According to the evaluation, among those four
suppliers in the market, for TD chips at least, ADI was
the earliest and the most mature. Surely they had other
aspects that are attracting to us, for example, an internationalized
distribution of business. So either for future development
or for TD-SCDMA, it was helpful for us to continue. Based
on such reasons, through months of communication with them,
this issue was settled in September. And we thought that
it adds to mutual interest for both sides. Probably it was
not easy to find such company which had few overlapping
of strong points of both sides, both sides could be so mutually
supplemented, If they were sold to other company, they could
hardly find such organizational structure and product power
like ours (smile).
Wang Jing: I understand, the mutual supplement you mentioned
means that you are competent on 2G technology and marketing,
while they are competent on 3G product¡
Mingto Yu: Yes. Previously, we didn¡¯t involve any field
in TD-SCDMA. MediaTek does well in customer service in the
Chinese market, while ADI had excellent sales and marketing
team in the international market which was helpful for MediaTek
to enter the top 5 companies in future.
Wang Jing: Do you mean the first 5 mobile phone manufacturers
around the globe?
Mingto Yu: Correct.
Wang Jing: It is one of MediaTek¡¯s objectives that you are
striving for?
Mingto Yu: Correct, I think the ultimate objective of any
company is internationalization. Especially for mobile industry,
the top 5 companies occupy almost 80% of the market. As
the top 5 companies Nokia, Motorola, LG, Sony Ericsson,
and Samsung occupy almost 80% share of the market. So as
a chip manufacture, enter the top 5 companies become our
principal objective. And this objective is helpful to push
the home terminal customers cooperating with MediaTek to
the international market.
Wang Jing: Now we are all aware that MediaTek takes much
share in 2G market in China, and are your principal customers
in China?
Mingto Yu: Yes, name a company and it is probably our customer,
Lenovo, Konka, TCL, Tianyu, Gionee, and Bird. And we have
also started cooperating with ZTE.
Wang Jing: Do you have cooperation with the current top
5 companies?
Mingto Yu: We¡¯ve been preparing all the time for it actively
and the cooperation starts because LG is a customer of ADI,
and ADI is the largest chip supplier of LG.
Wang Jing: So that is also an important reason to acquire
ADI: global strategy.
Mingto Yu: Global strategy! You must have the global strategy
thought.
Wang Jing: Strictly speaking, can we call MediaTek multinational
chip manufacture?
Mingto Yu: How should we say? In the mobile chip business,
indeed most of our customers are in China presently, but
for other businesses and the distribution of our offices,
actually it is already internationalized. For example, on
optical storage chip, the top 3 companies in the world Samsung,
LG, and Lite-On are all our customers. Sony and Philips
of the top 3 DVD player companies are also our customers
and for digital TV, Samsung and Philips digital are also
our customers.
Wang Jing: How much is your portion of wireless communication
chip business in MediaTek?
Mingto Yu: Currently it takes almost half.
Wang Jing: So internationalization of this aspect is of
vital importance.
Mingto Yu: That¡¯s true, we have wide business distribution
in the globe, besides the bases in Beijing, Shenzhen, and
Hefei in Mainland China. And we also have bases in India,
Singapore, United States, Japan and South Korea. Our bases
in United States and Europe can be increased by purchasing
ADI¡¯s mobile chip business and it is helpful for us to provide
support for our customers abroad like Motorola, Sony, Nokia,
and etc.
Wang Jing: So is it also one of your purposes of acquiring
ADI?
Mingto Yu: Right.
Past and the Future of MediaTek
Wang Jing: The following question is interesting, I have
attended several discussions or forums held by chip manufacturers,
and all the mobile experts mentioned such problem. That
is, from its establishment in 97, MediaTek has grown into
a successful company as today we see, especially in Mainland
China market, an important reason for this is that your
company provided a ¡°Turnkey Solution¡±. With which mobile
manufacturers can deliver mobile phones immediately after
some appearance designing based on your 2G chips . For 3G,
is this model applicable? Because I think 2G application
is simple that audio and technology standardization have
reached a high level, and you can combine them in the chip.
But 3G is more complex, there are much more applications
in 3G than 2G. And you have to face different customer groups,
delicate market and etc. Can you continue the turnkey solution
which was once your magic weapon for previous success?
Mingto Yu: Many people discuss this issue, and I think actually
they stay in the surface of this problem rather than reaching
its internal. For us, the turnkey solution is only a means,
and our real purpose is to meet customers¡¯ demand. So I
mentioned in the beginning that our strength is at customer
service and we can meet customers¡¯ demand and needs! In
2G market, the gradual development of mobile industry is
not like before. Previously it was much like a communication
product only enabled with call function; but with the gradual
development, we find that mobile is much like a consumption
product and new highlights are added at any moment. For
many people, when they buy mobiles, call is probably taken
as a basic requirement. They would pay much more attention
on appearance and functionality, just like when they are
buying consumption products. Before they cared whether it
had high call quality and did not care about others, it
was basically used for call only. But presently there are
so many people who may change a mobile each two or three
months for they take mobile as a ¡
Wang Jing: Consumption product?
Mingto Yu: Correct, consumption product, they concern much
about whether it looks nice, whether it is suitable with
their status and whether its design and function go with
their style and business needs. Attitude of mobile phone
customers have change, so the whole product cycle become
pretty short and it can reflect market's requirement soon.
Many customers told me that there was a requirement tendency
in the market, they requested us to provide it soon, and
total solution could comparatively adapt such situation.
If it is like before, producing period is prolonged for
a long time, 9 months is paid for a design, and it cannot
reflect the public¡¯s requirements. If you pay half a year
or 9 months for a chip design, you'll lose market. I think
to some extent turnkey is an outcome from the special space-time
environment of customer requirements and it is a business
model. So I think the business model would be different
in different periods and different environmental backgrounds
but its essence is to satisfy customer needs.
Wang Jing: That is to experience and observe market requirements
completely and satisfy customers¡¯ needs. In other words,
the turnkey solution satisfied such requirements at that
time and will there be probably some changes for 3G?
Mingto Yu: Yes. I think for 3G, we should concern whether
3G condition is mature for turnkey solution and if not,
I don¡¯t think this model is proper. If the development is
mature in future, turnkey solution is probably proper at
a special time point in that period. But presently at least
I don¡¯t think turnkey solution is proper on the initial
stage of 3G.
Wang Jing: I agree on this point and many mobile experts
also agree on it.
Mingto Yu: We always said that mobile manufactures should
pay their attention on design and control its quality because
this is a concern of customers when they buy mobiles.
Wang Jing: Then how about application? What is the work
division between chip manufacturers and mobile manufacturers?
In the previous turnkey solution period, chip manufacturers
took the bigger part of the work and mobile manufacturers
only work on appearance, but the current problem is that
3G will bring many applications, some of the applications
will not be beyond our imagination. Then how will chip manufacturers
establish a platform for downstream companies to exert their
capability on application?
Mingto Yu: For this part, we must cooperate with our customers
closely, because to some extent, our customers¡¯ sensibility
is quick because they face end consumers directly and are
easy to acknowledge what the public like and what they need.
They will bring the information to us, we will make the
product they need soon and feedback to them. And for this
part we must communicate with customers closely.
That is why I said customer support was of vital importance:
whether your customer support is excellent, when they ask
for anything, you can satisfy them in the shortest time.
I think it depends on your communication and interaction
with customers.
Wang Jing: Can your organization structure ensure it? Can
your organization structure in Mainland China satisfy the
rapid reaction?
Mingto Yu: Currently I believe we can, you can see that
previously either for DVD player or mobile, our advantage
is at customer support. We have software team in Beijing
serving customers in Mainland China to develop software;
we also have FAE tem in Shenzhen and we have almost 600
staff in Mainland China.
TD-SCDMA for MediaTek
Wang Jing: So, what part does TD-SCDMA
play in the strategy of MediaTek?
Mingto Yu: I need to say TD-SCDMA is an important factor,
but not the only. I¡¯ve said reaching tier 1 customers and
considerations of international strategy are equally important
for us. But TD is also an important consideration for the
acquisition of ADI.
Wang Jing: Can you be a little more specific? I¡¯ve been
to ADI a few times and talked with them. ADI was in co-operation
with Datang, who has the deepest understanding of TD. There
co-operation is of great strength, their product would also
be terrific. You have such a good background. After the
merger with ADI, What's your plan for TD in the near future
under the brand of MediaTek? And what about longer term
plan?
Mingto Yu: I think what I want the most in these days is
stability. The acquisition has just been done; our customers
and partners still have uncertainty about the future. There
is also the issue of adaptation¡ So immediately after we
announced the acquisition, we began visiting clients around
the world. About two weeks ago, I visited ZTE and talked
with their president. I also went to Datang and had a conversation
in time to show our commitment in co-operation. So I think
our short term goal is to maintain the co-operation stable,
which is very important for our partners and customers.
So we have begun to publish newsletters with customers,
including Datang.
Wang Jing: Yes, I¡¯ve read it.
Mingto Yu: Firstly we want to see the value chain stable,
which is extremely important. In the middle term projection,
with our advantages in 2G, 2.5G, like customer service,
research and development, we¡¯ll try to find a way to promote
the R&D of TD. I think the progress is quite good. But
through the participation of ADI, by our successful experience
of 2G and 2.5G in China, we can further push the development
of TD.
Wang Jing: The value chain of TD has grown stronger, and
MediaTek has joined in the camp of TD. Although TD is not
your only concern, but your participation is very significant
for the TD camp.
Mingto Yu: TD is not the only consideration, but it is an
important consideration. I believe TD is a very important
industrial standard in China, which means as a company of
Chinese people, it is very meaningful to support the technology.
Wang Jing: If MediaTek can spread the successful idea and
experience of excellence in service to the market, I think
it will be very beneficial of the development of TD in the
near future, because TD is no longer merely a technical
issue.
Mingto Yu: It¡¯s about popularity.
Wang Jing: Now it¡¯s about how we can push it in the market.
We have problems of business model and applications to solve,
but these are not only the problems of TD-SCDMA per se.
For TD, one key factor of popularity in the market is terminal,
which also comparatively needs more effort.
Mingto Yu: When people began to know about acquisition,
I've noticed a lot of media coverage. It used to be said
that MediaTek¡¯s involvement in TD-SCDMA has influence on
the industry. But I personally think, for the development
of TD-SCDMA, the more involvement there is, the more beneficial
it is. As you just mentioned, it¡¯s not only about technology,
it¡¯s about how we can promote it in the market. There ought
to be more participants. I think that is better. As for
¡°total solution¡±, I¡¯ve said there are different business
models in different times. Many several years later, there
will also be different business model for 2G, rather than
¡°total solution¡±. The market is always changing; you can
see the industry has been on the change. In the beginning,
a company would choose to do everything on its own. And
later there is division of work on the market, some only
concentrate on designing, and others on OEM, which is a
distinct business model from what we used to do before.
Wang Jing: The models are ever changing, every thing should
be changing.
Mingto Yu: Right, everything is changing. You may think
OEM is a business model right now, and you might also make
division in this model. In the past we used to divide testing
from manufacturing. All those business models are changing.
Nokia used to pick TI as supplier, now it has changed, and
it has become quite open. Nokia now concentrates on management
of channels and designing, which is a shift. So, I think,
total solution is only a business model in a specific time
span. It will change as time and circumstances change.
Catch up with the Future with Anxiety of Crisis
Wang Jing: How many employees do
you have at MediaTek?
Mingto Yu: We have 160 people in Beijing.
Wang Jing: How many do you have in total?
Mingto Yu: Around 2,700, globally.
Wang Jing: And what¡¯s your annual sales?
Mingto Yu: We¡¯ve done pretty well this year, around 2 billion
USD.
Wang Jing: Your average income is the highest.
Mingto Yu: It might be highest in the industry.
Wang Jing: Huawei has 50-60 thousand people, and 10 billion
USD sales, which is already quite OK. (Laughing)
Mingto Yu: It¡¯s not the same (laughing). The chip industry
is a part of knowledge economy which relies on brains. Very
different from old economy that requires laboring.
Wang Jing: Knowledge-intensive rather than labor-intensive.
Mingto Yu: This industry is much more important for the
development in the future.
Wang Jing: Yes, it's the age of information! I want to ask
another question, MediaTek has just joined the TD value
chain, if not from the standing point of your company, what
is your expectation of the industry of TD-SCDMA? I guess
you have considered such question.
Mingto Yu: Yes, I feel TD-SCDMA is extremely important.
That¡¯s why we would make so much effort in doing this. So
it must be very important in our consideration. Also, I¡¯d
say it is very necessary for China to develop its own standard
since the market in China is huge.
Wang Jing: What plan do you have in the coming one or two
years?
Mingto Yu: I think Mainland China is a very important target
market for us. You can see we have just moved in this building,
because we are really expanding so fast.
Wang Jing: You are simultaneously developing other 3G technologies?
Mingto Yu: We were developing WCDMA in the beginning, because
a chip company should follow the international trend. Currently
WCDMA is in a leading position in all 3G technologies. But
since we have our own standard in China, it is important
that we support. So, to be internationalized, we have to
balance the two.
Wang Jing: You may know that TD-SCDMA is being tested in
10 cities, and there are more than ten thousand base stations
in those cities. This scale is not very massive, but judged
by a normal standard, it¡¯s quite large.
Mingto Yu: Yes, also there will be bigger opportunity if
we can promote in emerging markets and neighboring countries.
We also expect MediaTek would go out of the border with
the operators.
Wang Jing: Also helpful to the international goal of MediaTek.
Mingto Yu: Right.
Wang Jing: I feel it¡¯s a win-win.
Mingto Yu: Yes, using the successful experiences, MediaTek
can advance much faster in TD industry. If we can make this
contribution to the market, we¡¯ll be very glad to have to
opportunity.
Wang Jing: Are you confident that as the spreading of 3G
in China, you can find a proper business model?
Mingto Yu: Right, the most important thing is the voice
and demand of customers. We¡¯ll work to meet the need of
our customers and develop the business model. This is the
important thing.
Wang Jing: Expect this, what do you think MediaTek is also
good at to be outstanding in the competition? You have succeeded
in 2G in the domestic market, and what are the other advantages
that you have as a company?
Mingto Yu: As a company, I think what we have beyond service,
is our power of execution with efficiency and flexibility.
We act quickly to every issue we face; we can make decision
quickly; we can bring the decision to reality quickly. And
we keep verifying if there are mistakes, and readjust as
needed. We are proud of this ability on very product or
everything we do.
Wang Jing: This is very well-known. I have also heard feedbacks
from other member companies about your power of execution.
Mingto Yu: The combination of service and execution is also
important. When I receive any feedback from customers, we
set out to handle and try to get the issue solved as soon
as possible. What behind us is a sense of crisis, which
is also an idea that our chairman requires from all staff.
The competition in chip business is very fierce. The entrance
requirement is not high. But entering the chip manufacturing
industry is quite difficult, you should have some billions
or tens of billions to do that. But the entrance into chip
designing industry isn¡¯t high. There are more than a hundred
of chip designing companies in Taiwan, and I believe there
are thousands of designing companies in Mainland China.
Wang Jing: You should be outstanding.
Mingto Yu: When you want to be outstanding, you ought to
keep awareness of crisis in mind. Chip designing companies
highly rely on products, and every product belongs to an
era. When that era is gone and there is no new product,
the companies dies.
Wang Jing: We say: ¡°sustainable development¡±.
Mingto Yu: Yes, keep looking for growth points. It¡¯s a new
idea to me, ha-ha. This is very important. For a manufacturing
company, they only need to build new facilities, which I
think is comparatively easy; but it is much difficult to
find new products. First, you need to ensure the product
you find is the right one. And after you find it, you should
be able to develop it in time. This is of great challenge.
If you¡¯ve chosen a wrong product, you effort of several
years will vanish in vain. Or if you¡¯ve chosen the right
product and you are slow, you¡¯ll also die. Your competitors
are running. In this industry, there's only position for
number one. Number two even doesn¡¯t have the chance to play
the game. The competition is very fierce in the industry.
Your previous product leads the industry doesn¡¯t ensure
you can succeed for the next one. You should always keep
the awareness in mind. We are facing challenge every day
in the company. The industry-leading position is only transient.
If you always keep this in mind, you can make good and steady
steps. We can see that a lot of companies die this way:
they get arrogant when they make a little achievement. Once
they are arrogant, they believe all past successful experiences
are applicable to the future. And in fact, all previous
success is achieved in certain circumstances. The whole
situation for next product would be different, and your
past experience is not applicable at all.MediaTek has different
types of products. For cell phones, from other development,
we can cooperate with small companies, but things will be
different for digital televisions. And you can¡¯t apply the
model of cell phones to TVs. So, I feel that you need to
be aware of service of customer and power of execution.
And the most important thing is you should also be aware
of the crisis. Survive with awareness, die with blindness.
This industry is too competitive. Be aware of crisis or
you¡¯ll soon be out of the game.
Wang Jing: You also have advantages in TD-SCDMA, because
you have deep co-operation with domestic mobile phone companies
that can easily expand to TD. The co-operation with international
companies in the field of TD mobile phones is also easy,
because you can get access to LG through ADI. So your current
costumer relations can be further strengthened to TD. The
other 4 international companies are also engaged in TD-SCDMA
in different degrees. This gives chance for you to contact
and co-operate with them. TD-SCDMA could be a key step in
your international strategy at MediaTek.
Mingto Yu: Not ¡°could be¡±, it¡¯s exactly what we want. So
we need to stabilize the co-operation in short term and
let our partners and customers feel confident. We¡¯ll then
keep up the good relation and promote the industry to engage
it in the market, and let more people enjoy the benefit
of TD-SCDMA.
Wang Jing: Co-operation is important. And your current co-operation
with Datang, who is strong at TD-SCDMA, is also very beneficial.
Mingto Yu: Mr. Wang, can you give us some more opinion in
the end?
Wang Jing: Our industry, including government officials,
all agrees that we shouldn't call TD-SCDMA a Chinese standard.
We don¡¯t call it ¡°Chinese¡± standard, only foreigners use
this term. TD-SCDMA is a technical standard that has been
approved by ITU. It is an international standard. Since
it¡¯s international, your sight should not be bounded in
China. It's not only 3G, you should always go further. We
have a long term objective for TD-SCDMA. To achieve this,
there should be wide participation, especially the involvement
of top companies, and terminal chip companies. Comparatively,
the system is more mature than terminal chips. We have four
major system companies. In fact there are four pairs: ZTE
and Ericsson; Huawei and Siemens (now Nokia Siemens); Datang
and Alcatel; Potevio and Nokia. All are balanced in strength.
From the kernel of system, there¡¯s not much difference with
WCDMA. And there are some differences in base-station and
RNC parts, so comparatively this part is more mature. But
terminal is a decisive part for how you can push TD-SCDMA
in the market. On this market, external power cannot help
you. Governmental support won¡¯t work in this part of the
game. In the end it¡¯s the customers who buy your stuff.
Manufacturer and operators should have much marketing experience,
user experience, service ability and capability in response.
I think the entry of TD-SCDMA business of MediaTek is very
important for the industry. You have been successful in
the market of 2G in China. You have advantages and understanding
of customers. I don¡¯t have more suggestion for you. I believe
you can succeed in this area if you are decisive, and co-operate
with Datang through the platform of ADI, because their product
is pretty good in the solution area.
Mingto Yu: Yes. We made assessments a while ago. ADI and
Datang are mature in the existing chip suppliers, they started
early.
Wang Jing: Yes. So I feel if your co-operation with Datang
can be maintained in long-term, it¡¯ll be mutually beneficial
for both of you.
Mingto Yu: I believe to make a standard usable, it should
be promoted globally, rather than restricted in a local
area.
Wang Jing: Now that it is a standard, it should be accepted
by all. If only you are playing the game, how can it success?
We encourage powerful companies to join the TD camp.
Mingto Yu: Right!
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