Chinese telecommunications operator China Telecom (CHA) is considering acquiring the Taiwan-based wireless communications and digital media solutions provider MediaTek.

Reports in local media such as Sina.com suggest China Telecom has acquired stakes in MediaTek through companies in the second-tier market and the company will announce the total acquisition after it gains the absolute holdings of the shares.

The news has been confirmed by several insiders. An insider from China Telecom says China Telecom does have the intention to acquire MediaTek, but only a few high level staff know about this. Other employees have no idea about the operating method and the development of the acquisition. However, MediaTek says they have not heard of such information.

Founded in 1997, the Taiwan-headquartered MediaTek Inc is a leading fabless semiconductor company for wireless communications and digital media solutions. In 2007, MediaTek achieved sales of USD2.475 billion, a year-on-year increase of 51%. In the current global chip market, MediaTek holds the second position with about 20% market share, following Qualcomm who tops the market with about 30% market share.