The Rise of MediaTek : Disruptive Innovation in Mobile Phone Chipset Industry

Background: In the bestseller "The Innovator’s Dilemma", C. M. Christensen explained why and how outstanding companies can do everything right and still lose their market leadership. The mobile phone chipset industry is a hightech industry that has a heavy impact on our daily life. In the past ten year, the landscape of this industry has changed drastically. Many entrenched players with their glorious history dated back to the beginning of semiconductor industry’s formation failed while a few new comers rose to dominate the market. Apparantly the entrenched ones had all the resources needed to maintain their competitive advantage as the semiconductor industry is capital and technology intensive which requires continuous innovation. How could the new comers outperform the established ones in such a short time? The author started her investigation bearing the mind of disruptive innovation. Aim: In this thesis, taking the mobile phone chipset industry as an example, the author studies the rise of MediaTek, a company from Taiwan specialized in providing turn-key chipset solutions to mobile phone vendors. By doing the study, the author tries to reexamine the disruptive innovation theory proposed by Christensen and find out the root causes of the rise and fall of different companies in this industry. Methodology: The thesis uses deductive approach based on secondary data and qualitative interviews. Findings and Conclusion: The thesis verifies the five principles of disruptive innovation theory originally proposed by Christensen using the example of mobile phone chipset industry and MediaTek’s success in riding on the tide of disruptive innovation. The author analyzes MediaTek’s competitive advantage and business model to discover the reason why it succeeded in the fierce competition. Furthermore, the author brings forward three principles for incumbents to handle disruptive innovation based on the study conducted in this thesis