MediaTek is Gunning for Qualcomm

Qualcomm has much to fear from Intel (s intc), which is attempting to gain a foothold in the mobile market while Qualcomm (s qcom) has turned its focus upmarket to computers. However, news out today from MediaTek should have them even more worried. MediaTek, a Taiwanese baseband provider that currently is ranked No. 2 in the world, has signed an agreement to license LTE technology from NTT DoCoMo and work with the Japanese carrier to build out an LTE-compatible platform.

MediaTek, which has become a mainstay radio provider in emerging economies, is moving upmarket, following the spread of 3G and smartphone adoption. Earlier this month MediaTek joined the Open Handset Alliance — the group pushing the Android (s goog) operating system forward. In the release, MediaTek said:

Building on the success in delivering feature-rich multimedia experiences on various mobile platforms, MediaTek enables cost-effective AndroidTM -based smart phones by delivering high-quality; full system solutions that further reduce the barrier to entry for broader world-wide penetration of smartphone products that serve the growing appetite for connected devices. Furthermore, working closely with customers, MediaTek is confident to drive wider adoption of smart phones in new and emerging markets.

MediaTek is finding success in emerging markets, where its baseband chips for 2G wireless networks are cheap, and thus enable less-expensive handsets. Qualcomm doesn’t really have a play in the 2G standards, except to ensure that its 3G chips can work with the older technology. However, MediaTek is clearly not going to stand by and watch its core base of 2G customers transition to smartphones on 3G and 4G networks, so the newly licensed LTE technology and support for Android will position it against Qualcomm in the coming years.

Many emerging markets are in the process of 3G deployments, with China making a rapid transition and India recently conducting its long-awaited spectrum auction. Despite its wins with application processors in high-end Android devices like the Droid or the HTC Incredible, Qualcomm’s Snapdragon chips are still an immature business compared with the revenue brought in by its cheaper integrated chips that provide both a radio and the application processor. It’s those cheaper chips that will be threatened as MediaTek matures.