Just ran into a very senior guy from Texas Instruments in Shanghai who has a one-way ticket back to headquarters in Dallas – and he counts himself lucky that he still has something to go back to, given the chipmaker’s deep job cuts. Although the economic crisis is a catalyst for the cutbacks here, the main factor is TI’s failure to overcome Mediatek’s dominance of the merchant chip market in China. If this guy had been able to do that, then he’d still be sipping martinis at chic clubs on the Bund.

This exec’s successor still wasn’t clear, but that’s the usual chaos these days in China. A lot of expats are heading home as the economic slump deepens. Once the music stops, whoever is left at TI’s HQ in China will have the unenviable task of once again trying to compete with Mediatek using a merchant chip unit TI has whittled to the bone.

TI is already working with a local shop called FG Wireless. The firm is trying to emulate the kind of soup-to-nuts support Mediatek offers white-box phone designers in China. If the effort gets some traction, the best TI can hope for is to milk the merchant chip business for a little while longer. Momentum remains with Mediatek, and I don’t expect that to change. If anything, it will grow as Mediatek strengthens its 3G offering in W-CDMA, and comes to dominate TD-SCDMA, a local 3G standard developed in China.