• Mobile segment fueled by strong demand for 5G and 4G SoCs.
• Inventory down to a healthy level during the quarter.
• We expect revenue growth in the flagship segment in 2024.
• On-device Gen AI set to be adopted across multiple applications like Auto, HPC and Edge computing.
• Enterprise ASIC projects to start production in late 2025, with revenue contribution expanding in 2026.

MediaTek’s revenue jumped 17% QoQ and 18% YoY in Q4 2023, largely driven by a recovery in the global smartphone market and the successful ramp up of the brand’s flagship SoC, the Dimensity 9300. The mobile segment experienced exceptional annual and sequential growth due to high demand for 5G and 4G SoCs. On-device gen AI is driving smartphone upgrade demand among flagship and high-end smartphones. Gen AI is also making its way into computing devices, specifically tablets. The Dimensity 9300, which has impressive generative AI capabilities, has been adopted by many tablet manufacturers for their flagship models. Customer and channel-level inventory lowered to a healthy level CEO Rick Tsai: “The inventory level right now is very healthy. Maybe at the end of Q4 2023, a bit too healthy. And you’re right that we are…Actually, in some cases, we are rushing our manufactured partners for shipments to us. Saying all that, our goal, of course, is to maintain a stable inventory. I think we have learned our lessons.” Shivani Parashar’s analyst take: “In Q4 2023, MediaTek successfully lowered its high inventory levels to a more normalized state, with stable customer and channel inventory. According to our supply chain checks, MediaTek’s channel-level inventory is currently at a normal level. Smartphone OEMs have started restocking their inventory, but they remain cautious. The macroeconomic conditions in the US and China have somewhat stabilized, with a moderate increase in demand. For Q1 2024, MediaTek anticipates strong YoY revenue growth, reflecting a more normalized inventory situation.” On ARM CEO: “We work with them on our modem, but we build our partnership with them. And I cannot say whether they will succeed or not for Xiaomi, but we do know OPPO met difficulties for sure… in many ways, I think that makes OPPO now even a stronger partner with us and vice versa. Still for ARM, we understand ARM is a business objectives and the business model and the -- and but if you look around the industry, MediaTek is one of the very, very few to AP really advanced AP supplier with track record. And I think it's important, maybe even imperative that we work together as an ecosystem partner in the market share together.” Parv Sharma’s analyst take: “It is not easy to develop chipsets. We have seen consolidation in the industry and many players have also quit the development of in-house chipsets. Building modems is another ball game as it requires IP and expertise. MediaTek has benefited from OEMs canceling their in-house development as these OEMs are now more reliant on chipset vendors. We have also seen MediaTek taking a collaborative approach by partnering with smartphone players to tweak chipsets for their smartphones.” CEO: “I think the growth picture remains still a little uncertain. First quarter, obviously, we know well and we are having, I would say, a strong YoY growth. And we all know, one of the major driver was the restocking. However, also, I would say, our SoS, the flagship SoC for the mobile applications is also contributing a great deal to our growth. My expectation is for our flagship SoC's growth to continue into the year the restocking momentum remains to be seen somewhat.” Shivani Parashar’s analyst take: “ “In 2024, we expect Android volumes to recover due to the normalization of excess finished goods inventory which weighed on the market throughout 2023. This normalization is expected to pave the way for an influx of new models. We anticipate MediaTek gaining volume as the low- and mid-market rebounds. However, we foresee increased competition in the entry-level 5G segment from Qualcomm and UNISOC. For MediaTek, 5G penetration is expected to rise more than other brands, considering its current greater dependence on LTE chipsets. Additionally, we expect revenue growth in the flagship segment in 2024.” Result summary

• Growth in revenues: MediaTek’s Q4 2023 revenue rose 17% QoQ and 18% annually to reach $4.1 billion, mainly due to recovery in the smartphone market.
• The mobile segment witnessed robust growth in revenue: The mobile segment revenue climbed 45% YoY and increased by 53% QoQ in Q4 2023 to account for 64% of the company’s total revenue. Growing demand for 5G and 4G SoCs and the successful ramp up of the company’s third-generation flagship SoC, the Dimensity 9300, contributed to this growth.
• New opportunities for smart edge: The smart edge segment accounted for 30% of the company’s revenue in down 20% QoQ. The decrease was mainly due to a reduction in orders from TV customers because of the pre-built inventory in H1 2023. 5G modems, automotive and ASIC categories continue to grow in Q1 2024.
• Power IC: The Power IC segment accounted for 6% of the company’s total revenue, up 18% YoY and flat QoQ in Q4 2023. Data centers and Power IC witnessed strong growth while broad-based consumer electronics revenue was flattish.
• Favorable guidance: MediaTek guided flat/slightly declining revenue for Q1 2024, ranging between $3.9 billion and $4.2 billion. Gross margin is expected to be around 47% in Q1 2024 while the operating expense ratio is expected to be around 28%. In Q1 2024, mobile segment revenue is expected to marginally decline following robust demand for restocking in Q4 2023. The smart edge segment will remain flat due to seasonality while the Power IC segment will decline due to seasonality and product transitions.
• Auto pipeline remains unchanged: In the automotive segment, in addition to the generative AI possibilities inside vehicles, the Dimensity Auto platform is consistently gaining popularity globally. MediaTek expects e-cockpit, 5G telematics and power IC, combined with NVIDIA's ADAS and software to position the company as a robust strategic partner for car manufacturers worldwide.
• Inventory turnover: MediaTek’s inventory declined to a healthy level in Q4 2023. The brand expects the overall inventory environment to continue to improve in the coming quarters.