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MediaTek’s revenue increased 9% QoQ in Q3 2023, highlighting a good quarter, despite a YoY decline. This sequential growth was largely driven by inventory restocking by smartphone OEMs and new 4G and 5G model launches. The demand for wireless and wired connectivity grew sequentially with shipments reaching a quarterly record. Also, the inventory situation has gradually improved, coming down to a steady level of 90 days compared to 115 days in the previous quarter. The company is aiming to launch the 3nm chipset in H2 2023.
Long-term growth potential in computing, edge AI and Auto segment
CEO Rick Tsai: “For the future, the increasing computing capabilities, the proliferation of edge AI, and the higher adoption of semiconductor content for automotive will provide strong growth opportunities for MediaTek. For AI, we believe the increasing demand for cloud AI will create a complementary demand for edge AI, and, the more edge AI, the better cloud AI.”
Shivani Parashar’s analyst take: “MediaTek foresees strong growth potential in computing, edge AI, and automotive semiconductors. The company will focus on capabilities to integrate edge AI into SoCs for a wide range of applications, mostly for smartphones and the auto segment. MediaTek has already collaborated with NVIDIA in the automotive sector. The company is well positioned and plans to continue investing in successful segments. The expansion into new markets like AI and ARM computing, by leveraging its technological powers and partnerships with leading foundries, will help the company generate significant revenues in these segments.”
Customer and channel inventory returned to a normal level
CEO: “In the last few months, we’ve observed improvements in overall channel inventories, particularly with respect to smartphones. With prudent inventory management, we have reduced our inventory for five consecutive quarters. At the end of Q3 2023, our days of inventory has reached to a healthy level of 90 days. We expect the overall inventory environment to continue to improve in the coming quarters.”
Parv Sharma’s analyst take: “According to our supply chain checks, Channel level inventory is reducing and by H1 2024, the inventory will be at a normal level. The smartphone OEMs have started restocking the inventory, but still, they remain cautious due to weak consumer demand.”
5G penetration to increase in 2024
CFO David Ku: “We still got a few more months to get into 2024, but in general, I think the mix in terms of 4G versus 5G, our view is actually 5G will continue -- for our own shipment perspective -- 5G probably will increase and 4G will decline in terms of shipment compared to this year, 2024 versus 2023. Because 5G again next year, our view is the overall market will still witness double-digit percentage growth, 4G probably will be flattish to slightly down from the market demand perspective.”
Shivani Parashar’s analyst take: “We forecast that 5G penetration will increase in double-digit percentage in 2024. In anticipation of a shift from LTE to entry-level 5G smartphones, OEMs are expanding their 5G portfolio across price bands. Intense competition among OEMs, availability of cheaper 5G chipsets and declining prices of 5G devices will contribute to the growth of 5G chipsets. The 4G chipset will decline by low-single-digit percentage in 2024 compared with that in 2023.”
Result summary
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