Mergers and acquisitions remain an effective strategy for chipmakers to be bigger to compete in the global marketplace, according to MediaTek chairman MK Tsai. For any chipmakers aiming for the global market, to enhance their worldwide competitiveness as timely and as efficiently as possible has become a top priority.

While continuing to upgrade and move into producing higher value-added products, Taiwan-based IC firms would also like to receive support from the government such as positive incentives, Tsai indicated. The government should assist the local chipmakers to be part of a new wave of consolidation in the semiconductor industry, Tsai said.

Witnessing billion dollars deals recently, Tsai suggested that competition in the global semiconductor industry will be more intense. Three major acquisitions have taken place since 2015 with total transactions reaching about US$6 billion. Nevertheless, the three companies - Freescale, Broadcom and Altera - which will be acquired in the deals collectively contribute only 5-6% to the overall production value of the global semiconductor industry estimated at around US$300 billion annually.

In addition, there has been an increase in horizontal mergers and acquisitions activity as companies are gearing up for an expected wave of new applications for the Internet of Things, Tsai observed. In the past, a division of work between companies at different tiers of the supply chain was a major trend in the semiconductor industry, Tsai said.

Responding to Taiwan's local media queries on challenges from the rise of a "red supply chain" in China, Tsai criticized that only Taiwan-based companies and media use this special term. China with its huge domestic market has drawn attention from not only international companies but also its local governments, Tsai said.

Rather than challenges and competition, Taiwan-based companies should look for cooperation and partnerships to benefit from the China government's push to support the local industry development, Tsai noted.

In end-2014, MediaTek unveiled the company would invest about CNY300 million (US$49 million) in a China government-led investment fund aiming to boost development of the local IC industry in Shanghai.