Although the technological success was obvious, the l

The term “White Box” is often used to describe products without a brand name. Such products are assembled from standardized parts, and they became a very popular category of desktop PCs. Hsinchu, Taiwan based MediaTek is a fabless semiconductor company that unleashed a white box market in mobile phone handsets by offering an innovative “complete solution” for 2.5G and 2.7G handset manufacturers, dramatically lowering the barriers to entry into the business. Besides enabling many Chinese branded manufacturers to enter the business, the grey market in components unleashed a complementary market of “Shanzhai” makers. Together these firms captured a significant fraction of the China market, as well as exports (both legal and grey) to 102 countries. CEO Ming-Kai Tsai is faced with the question of the best growth path. While multiple tier one handset makers are dismissive of MediaTek, perhaps because of its role in enabling the Shanzhai, the company’s offerings have enabled an “army of ants” to challenge the leaders. Can MediaTek move up-market to sell its chipsets to the likes of Nokia? Under what terms

5. CONCLUSIONS AND SUGGESTIONS 5.1 Conclusions At the end of 2007, both China‟s government‟s withdrawal of the license for mobile phone production policy and the turn-key solution to design a mobile phone provided by MediaTek, have greatly reduced the work of mobile phone design, as many small enterprises with a previous background of being an OEM and distributor of leading mobile phone brands have joined mobile phone production. These developers collaboratively provide the so-called „Shanzhaigi‟ to the domestic market in China. Shanzhai, a terminology that emerged in 2008, is a synonym for indigenous innovation in China. This research defines the term as a primitive indigenous innovation product supported by a group of value chain suppliers that provide a good enough product with an affordable price in a rapid time frame to fulfill the needs of target customers. This paper further reveals the systems, operation mechanism, and value proposition of the so-called „King of Shanzha‟,