MediaTek records impressive quarter, strong growth from 5G flagships

  • MediaTek recorded a strong second quarter with revenues of $5.5 billion, an increase of 23.9% YoY and 9.1% QoQ. This growth is primarily driven by the smartphone segment. MediaTek maintained its position despite tough macroeconomic conditions and a slowdown in the China Market.MediaTek Q2 2022 Earnings
  • The company’s smartphone segment has achieved a revenue of $3 billion in Q2 2022, up by 16.5% annually and 12% sequentially. The growth was driven by the ramp-up of premium 5G smartphone chipsets and demand for 4G. During the quarter, Chinese smartphone OEMs launched phones with the new Dimensity 9000 and Dimensity 8000 series chipsets. Overall, the smartphone segment contributed 54% of the company’s total revenue in Q2.
  • The Smart edge segment contributed 38% to MediaTek’s Q2 2022 revenues. This segment has grown by 33% YoY. Key drivers in the smart edge are migration to Wi-Fi 6, 5G modem, ASICs for a gaming console, and demand for wired connectivity. However, the demand for TV and tablets declined due to weak consumer demand. It is also investing in ASICs for 5G infrastructure and enhancing its capabilities in power-efficient ARM-based processors.
  • Power IC accounted for 7% of MediaTek’s Q2 2022 revenue. This segment is down by 5% from Q1 2022 owing to weaker demand for power ICs used in smartphones and notebook PCs. The demand for Power ICs in the auto and industrial segments remained stable contributing to 10% of the Power IC’s segment revenue in Q2 2022.
  • MediaTek guided weak Q3 revenues in the range of $4.8 to $5.2 billion, a decline of 1% to 9% QoQ. The gross margin is expected to be around 49% and the operating expense ratio 26%. The decline in revenues will be due to ongoing customer inventory adjustments, global macroeconomic conditions, the weak China market and the expected continued negative consumer sentiment. MediaTek’s relatively greater dependence on the mid and low-end smartphone segments, which are likely to be more affected by the current macroeconomic situation aswell as current excess channel inventory is leading to a weaker second half of the year.
  • According to Counterpoint Research’s Smartphone AP/SOC Shipment Tracker, MediaTek has led the smartphone AP SOC market with a volume share of 39% in H1 2022, followed by Qualcomm with 28%. MediaTek will continue to dominate the AP SOC market in Q3 2022. We are already seeing order cuts in H2 2022 due to excess inventory. The overall decline for MediaTek is higher than Qualcomm, as the impact of a slowdown in Qualcomm’s more premium-oriented customer base is likely to be somewhat lower.
  • Inventory corrections will take two to three quarters to normalize. The OEMs and distribution channels have started to adjust inventory. MediaTek will manage costs and expenses and will also slow down hiring to control operating expenses.

Overall, it was a strong quarter for MediaTek driven by the smartphone segment. We are forecasting a weak H2 2022 due to macroeconomic conditions, inventory corrections and a slow China market. Further, high dependence on smartphones and slow diversification into automotive and IoT (ARM-based PCs, XR, enterprise, etc.) will negatively impact the revenues in H2 2022.

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2017: A Year of Mixed Results in the Latin American Smartphone Market

According to the latest research from Counterpoint’s Market Monitor service the Latin American (LATAM) smartphone market grew 5% YoY in 2017.  Samsung continues to be the absolute leader of the region with more than 38% share.

Commenting on the 2017 smartphone market trends, Counterpoint’s Senior Analyst Tina Lu, highlighted, “The LATAM smartphone market grew 5% YoY in volume. However, we see a deceleration in the rate of replacement. Despite healthy economic conditions, the market decreased by more than -5% in Q4 2017 when compared to the same quarter in the previous year. This is the first time that the smartphone market has had a YoY decline, denoting that the smartphone market is close to maturity. We expect this softer rate of replacement to continue throughout 2018, leading to a flat year in 2018.”

Miss Lu added: “On the value side, the smartphone market grew only 1% YoY. This was caused by a 17% YoY decrease of the premium segments (>$400), which led to slight drop of ASPs. Devices such as the iPhone or Samsung Galaxy S-series in LATAM have always been more expensive than the same model in the US. Differences in price can range between 25% to 110% higher, depending on the country. At the same time, the LATAM average consumer purchasing power is notably lower than Europe or US.  A smartphone is a significant investment for the LATAM consumer, inducing them to hang on to the device longer, resulting in slower rate of replacement.”

Commenting on vendor performances, Parv Sharma, Research Analyst, noted, “Samsung has been the absolute leader of the LATAM market.  Its success is due to its strong foothold in the region–especially in Brazil and Argentina. Assertive investment in marketing, sales, supply chain and aggressive prices has rewarded Samsung.  The company grew volumes more than 14% YoY. Samsung’s focus on having the best supply chain network, which starts with a well-established local manufacturing and assembly process, has allowed Samsung to launch the Galaxy S8 and Galaxy S9 almost at the same time as the models were launched globally. This competitive edge has helped it to increase its market share, which is more than triple its closest competitor.”


Exhibit 1: Percentage LATAM Shipment Volume Share – CY17

Source: Counterpoint Research Market Monitor CY17

Market Summary

  • LATAM smartphone sales increased 5% YoY, reaching 147M units in 2017.
  • 89% of the mobile phones shipped were smartphones. Smartphone penetration increased almost 2% YoY.
  • LTE reached 87%. 25% increase compared to CY16.
  • LATAM is still a highly concentrated market, top 5 brands represented almost 71% of the market, leaving more than 190 brands battled for the remaining 29% of the market.
  • Only two (Motorola and Samsung) out of the top 5 brands had positive YoY growth.
  • LATAM is still a mid-low range market. $100-$199 is the largest segment in volume and value. This segment has grown around 13% YoY.
  • The main feature offered in this segment were >5” screen and between 8mp-13MP camera.
  • Samsung J-series, LG K-series and Motorola G-series have all contributed to the growth of the $100-$199 segment.
  • Ultra-low segment (~$99) grew around 5% YoY. Its growth has been impacted partly by the increased offering of refurbished (certified and non-certified) devices.
  • The mid-high segment ($300-$399) grew more than 6%, mainly driven by older flagship models from Apple and Samsung.
  • The smartphone category ASP decreased by 3% compared to CY16.


Exhibit 2: Latin America Price Band Volume Variation 2016 vs 2017

Source: Counterpoint Research Market Monitor CY17

OEM Performance

  • Motorola gained 380 basis points of share YoY. It was the brand with the biggest YoY growth in LATAM. The launch of the C series with a sell-in price below $100 and its effort to improve its relationship with America Movil has enabled it to add a few models to the operator’s portfolio. This has boosted its performance and it has become second in volume share within the region.
  • Samsung grew 320 basis points of share YoY. It was the brand with the biggest growth in terms of volume. It has been the absolute leader, in both volume and value, in the region.
  • 9 out of 10 top selling smartphones models were from Samsung J series.
  • Many Apple users are postponing the replacement of their device, resulting in a decline of 92 basis points of share.
  • LG lost 91 basis points of share. Despite its aggressive pricing on the K series, it could not fight against Samsung and Motorola aggressive marketing strategies.
  • Huawei decreased 70 points. It lost its momentum as it focused on promoting higher- end models.
  • Lanix led the Local Kings (Brands) space. It successfully added a wide portfolio of very low-end smartphones for the megacarrier America Movil.

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Market Monitor : Q1 2014 :: LTE Smartphones Grow 91% Annually

According to the latest granular research from Counterpoint’s Market Monitor service, the global LTE smartphone shipments grew 91% annually in Q1 2014 reaching more than a fourth of the total smartphone shipments during the quarter.

Key highlights of the report are:

  • LTE smartphones reached its highest ever first quarter shipments contributing to more than a fourth of the total smartphones shipments globally in Q1 2014
  • USA accounted for one in three LTE smartphones shipped globally
  • China surpassed Korea in terms of LTE smartphone shipments and will soon overtake Japan by the end of this year to become the second largest LTE smartphone market globally behind USA
  • Among OEMs Apple, Samsung & LG dominated global LTE landscape with a combined share of more than three-fourths of the total LTE market
  • Apple was the leading LTE smartphone with 42% share inspite of its narrow portfolio leveraging its wider distribution reach and huge share in premium smartphone market
  • Samsung saw a slight increase in its LTE smartphone share as it more than doubled its volumes compared to Q1 2013, thanks to its wider portfolio, reach and marketing muscle. Samsung’s LTE portfolio spans from the premium Galaxy Note III to mid-tier Galaxy Core LTE
  • Both Samsung & Apple enjoyed higher share in LTE segment also due to stronger performance in key LTE markets such as USA, Canada, Japan and Korea.
  • However, in second half we expect the share for both the top brands to reduce (but not significant decline in volumes) a bit as the Chinese OEMs such as Coolpad, Lenovo, Huawei, ZTE & others ramp up their LTE smartphone shipments at China Mobile with highly competitive sub-1000 yuan phones.

Counterpoint Research LTE Smartphone Market Share Q1 2014

  • The top  five fastest growing smartphone brands were Kyocera, ZTE, Huawei, Sony and LG obviusly growing on a smaller base compared to Apple & Samsung but capturing market share as growing faster than the overall market
  • LG should be able to continue its good growth story in coming quarters in this segment with the recent launch of its highly promising flagship LG G3 to take share away from rivals in premium LTE segment
  • Huawei & ZTE will try to dominate in entry- to mid-tier wholesale price bands in LTE smartphones with majority of volumes coming from China and prepaid segments of US & Europe
  • Counterpoint expects a rising trend for an super-LTE phones which is a multi-mode, multi-band devices including TDD-LTE and FDD-LTE capabilities in-built into the device as OEMs look forward to realize scale across operator and open retail channels with minimal SKUs.

LTE smartphone Shipments Growth By Brands Q1 2014

The comprehensive and in-depth Q1 2014 Market Monitor is available for subscribing clients and can be dowloaded from here.

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