- MediaTek recorded an impressive set of numbers for Q1 2022 with revenues growing 32% YoY and 10.2% QoQ to reach $4.8 billion. The company’s mobile phone segment achieved a revenue of $2.7 billion, growing 29% YoY. According toCounterpoint Research’sSmartphone,AP/SOC Shipment Tracker,the addition of the Dimensity 9000 to the premium segment has added meaningfully to the overall revenues that have also been driven by 5G AP/SOCs in the mid-tier segment. LTE AP/SOCs are still attracting high demand and will be in tight supply throughout 2022. Based on our data, LTE AP/SOCs contributed to one-third of the total AP shipments in Q1 2022.
- The smart edge segment contributed 39% toMediaTek’s Q1 2022 revenues. This segment is mainly driven by the Wi-Fi 6/6E migration and higher-end solutions for smart TVs and tablets. Technology migration trends in smart edge platforms have led to ahigher blended ASPin this segment.
- The power IC segment accounted for 8% of the total revenues, growing 52% YoY and 21% QoQ. A large part of the PMIC segment’s revenue is coming from displays and smartphones. Automotive and industrial applications contribute to 10% of the PMIC revenue and will drive growth for this segment in 2022.
- MediaTekguided revenues to be in the range of $5-$5.3 billion in Q2 2022, up 3~10% QoQ and 17~25% YoY. The mobile phone segment will show the strongest growth due to the shifting of demand fromLTEto5GAP/SOCs. As theChina market is slowing, the revenue growth will come from other regions like India and Europe. Also, theDimensity 9000 and 8000 series will continue to add to the revenues in Q2 2022. However, due to theslowdown in Chinaand deteriorating macroeconomic conditions, we have reduced our H2 2022 forecast for theDimensity 9000.
- Revenues fromWi-Fi 6, 5G SIM modem, 5G tablet, 10G-PON and 4K smart TV are also expected to grow strongly in H2 2022. Also, MediaTek’s mmWaveSOC is on schedule to ship in the second half of 2022. It will pave the way for MediaTek’s further expansion in the global market.
- According toCounterpoint Research’s Smartphone AP/SOC Shipment Tracker, MediaTek will continue to lead the smartphone AP SOC market with a volume share of 41% in Q2 2022, followed byQualcommwith 27%. The company’s strategy of 5G,Wi-Fi 6, focused product migration, geographic expansion with global customers, and penetration into high-end and flagship segments will allow MediaTek to retain and even improve its strong market position.
- Chinaslowdown,COVID-19 lockdownsand macroeconomic conditions will affect theglobal smartphone market. MediaTek guides flat growth for the smartphone market in 2022 and5Gpenetration (660-680 million units) reaching 50%. Further, 5G penetration is expected to reach 70% in the next two years.
- SmartphoneOEMslikeOPPO,vivoandXiaomicurrently have inventories with distributors and also forcomponents like AP/SOCs, PMICs and DDICs. This has led to a drop in AP/SOC orders for MediaTek for H2 2022. But MediaTek is keeping a high inventory reserve this quarter to sustain its OEM andODMpartners during the worseningCOVID-19situation. MediaTek normally runs with around 90 days of inventory. But it has now raised this to around 100 days to manage potentialsupply constraints.
- MediaTek sought to reassure investors that it would not follow a low pricing strategy to counter slowing demand. Instead, it will invest in future growth. Its pricing strategy will also leverage its high capacity and will manage profitability by maintaining similar pricing as the previous quarter. We expect overall 5G AP/SOC ASPs to be flat compared to last year. If the competition reduces the prices, it will be challenging for MediaTek to maintain growth in H2 2022. Due to the strong demand for LTE AP/SOCs, the ASPs will not decline this year. Overall,5GAP/SOCs will have a premium pricing over LTE. The company is now focusing on developing5G AP/SOCs for low-endphones priced less than $150. We believe this will happen two years down the line. However, based on our estimates, LTE is going to dominate the less than $100 smartphones, driven by regions like LATAM, Africa and APAC.
- Presently, MediaTek is not a big player in thePC业务,只有a few Chromebook-type devices in the market. The company played down its expectations for substantial growth in the PC sector while confirming that it was interested in the potential of the Arm-based PC market.
- Smartphones still contribute 53% of the revenues for MediaTek. For longer-term growth, MediaTek has to reduce dependence on smartphones and expand into areas like the smart edge,automotive, connected PCs andAR/VR.