Qualcomm and MediaTek's mobile gaming focus won't be enough to reverse the trend toward mid-tier phones

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As global demand booms for basic, cheap phones, many chipmakers for the smartphone space are facing a problem: They'll see lower revenue and profit margins as these lower-cost phones proliferate, even as they continue to spend heavily on developing chipsets for high-performance smartphones at the top end of the market.

To combat this and boost demand for the most expensive devices, leading smartphone chipmakers Qualcomm and MediaTek are looking to premium chipsets optimized for mobile gaming.

Here's what Qualcomm is doing: The San Diego-based chipmaker recently announced the Snapdragon 855 Plus, a midcycle upgraded variant to its flagship smartphone chipset, which is specifically built for enhanced performance in gaming, extended reality (XR), and other computationally intensive tasks.

Qualcomm is likely looking to offer phone manufacturers an even more capable option to include in phones slated for the end of this year, like the rumored Google Pixel 4, which will likely just miss out on the next Qualcomm chipset, Snapdragon 865. And companies planning phones for early 2020 will be able to use the 855 Plus instead of the more expensive 865, rather than dropping down to midtier options like the Snapdragon 665.

Here's what MediaTek is doing: The Taiwanese semiconductor designer is reportedly developing its own gaming-focused smartphone chipset, though details are sparse, according to Android Authority.

MediaTek's chipsets have generally lagged in graphics performance compared to Qualcomm's in the past, and its system-on-a-chips (SoCs) are also typically less expensive for phone manufacturers than the US-based company's, which could help MediaTek win contracts for devices just below the top tier that still deliver gaming performance.

The bigger picture: While the gaming-first efforts of chipmakers might have some positive impacts at the margins, we don't think these specialized chipsets will help Qualcomm, MediaTek, or their phone-manufacturing partners to drive up flagship device sales.

Higher-powered chipsets will give gamers access to better graphics and performance in games, but it won't give them a competitive advantage during gameplay. And because app developers don't want to limit their games to a subset of phones, the amount of games that fully utilize the capabilities of advanced chipsets could be small. That in turns limits the appeal of premium devices for mobile gaming.

Chips delivering better mobile gaming experiences won't translate to higher premium device sales because consumers who value high-quality gaming are likely already buying those phones. With gaming moving to mobile, there is more demand for premium smartphones to run these sorts of apps.

But consumers also have the phones they need already, in many cases, and those who don't want them don't get significant or noticeable performance advantages from spending, in many cases, twice as much. And with the development of cloud-based gaming services, these sorts of powerful gaming-oriented SoCs will start to have even less of an impact on the mobile phone market over the next few years.

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