Weak Q4 2022 for MediaTek; Revenues to Further Decline in Q1 2023

  • MediaTek’s revenue was down 25% YoY and 26% QoQ in Q4 2022.
  • The mobile phone segment’s revenue declined 25% YoY and 30% QoQ.
  • MediaTek has downgraded Q1 2023 revenues to $3.0-$3.4 billion, a decline of 35-40% YoY and 3-12% QoQ.
  • The company has guided the inventory levels to normalize by the end of H1 2023.

MediaTek has reported $3.4 billion in revenue for Q4 2022, down 25% YoY and 26% QoQ. For the full year of 2022, the revenue was $18.7 billion, up 6% YoY. MediaTek delivered a strong H1 2022 driven by 5G SoCs but a weak H2 2022 due to macroeconomic headwinds and customer inventory adjustments. The QoQ decline was due to the slow China market, weak consumer demand and inventory correction by smartphone OEMs. The mobile phone segment’s revenue declined 25% YoY and 30% QoQ due to aggressive inventory adjustments by customers. The segment contributed 52% of MediaTek’s Q4 2022 revenue.

MediaTek Q4 Earning



  • The smart edge segment, which contributed 42% to the company’s revenue in the fourth quarter, declined 18% sequentially due to order cuts from telecommunication operators for inventory adjustment. Revenues from enterprise ASIC and automotive products increased due to growing popularity in the US and Europe regions.
  • The power IC segment accounted for 6% of MediaTek’s revenue, declining 37% QoQ in Q4 owing to weak demand from consumer devices such as smartphones. But the demand for power ICs from automotive and industrial applications increased in Q4.
  • Changing view from the previous quarter’s guidance, MediaTek downgraded Q1 2023 revenues to the range of $3.0-$3.4 billion, a decline of 35-40% YoY and 3-12% QoQ. Gross margins in Q1 2023 are expected to be around 47.5% and the operating expense ratio around 33%. Most smartphone OEMs will follow a conservative approach to maintaining their inventory. Smart TV and Wi-Fi will see a slight increase in demand in the first quarter.
  • MediaTek also launched satellite-based connectivity solutions with Bullitt group, to be available in Q1 2023. MediaTek is the third player after Apple and Qualcomm to offer satellite-based connectivity solutions.
  • MediaTek guided the inventory levels to normalize by the end of H1 2023. This is in line with our view. In H2 2023, MediaTek expects to see growth in revenues. Currently, Chinese smartphone OEMs have 3-3.5 months of smartphone inventory levels, which will come down to 2-2.5 months by the end of Q1 2023.
  • According to Counterpoint Research’s Smartphone AP/SoC Shipment Tracker, MediaTek shipments have declined due to ongoing inventory adjustments, global macroeconomic situation, and a weak China market. LTE SoCs declined more than 5G SoCs in Q4 2022.
  • Overall, weak guidance from MediaTek for Q1 2023. The first half of 2023 is going to be tough due to inventory correction and macroeconomic uncertainties. We forecast the market to bounce back and inventory levels to come back to normal in the second half. We expect the overall smartphone shipments to be flat in 2023. Therefore, despite the growth in the second half, we forecast smartphone AP SoC shipments to contract in 2023.

Related Posts

Samsung Became the Third Largest Smartphone Application Processor Vendor Globally in 2019

Samsung captured the third spot for the first time in terms of Application Processor (AP) chipset volumes in 2019. Samsung and HiSilicon (Huawei) were the only vendors in the top five to see positive share growth

According to Counterpoint Research’s latest quarterly handset report, Samsung Electronics and HiSilicon (Huawei) were the only vendors among the top five smartphone application processor (AP) makers to see positive share growth in 2019; Qualcomm, MediaTek and Apple all saw declines (see figure 1 below).

 Figure 1:  Global Smartphone AP Market Share, 2018 & 2019

Global Smartphone AP Market Share by Sales 2018 - 2019

Despite a 1.6%pt decline through the year, Qualcomm maintained its solid top spot ranking, accounting for one-third of smartphone AP shipments in 2019. The vendor enjoyed shares exceeding 30% in all markets except Middle East & Africa (MEA), where lower demand for high-end smartphones tempered demand for Qualcomm chipsets in comparison to other markets.

MediaTek also saw slight share declines in 2019, but maintained its second-place position. Continued strong performance in markets like MEA, India, and Southeast Asia – driven by demand for low-to-mid-end smartphones – helped the company to grab one-quarter market share of global smartphone AP sales. Huawei’s (HiSilicon) share declined in many markets outside China due the US Trade Ban, but the manufacturer offset these issues by significantly expanding presence and share domesticallySamsung performed particularly well in Europe, India and Latin America, and its share increased in other regions as well. Competition intensified in 2019, with winners continuing to get the balance right between processing speeds and price.

Jene Park, senior analyst at Counterpoint Research, commenting on Samsung’s growth, “Samsung Electronics increased in many markets, especially North America and India, resulting in a 2.2% YoY increase globally in a declining market. Samsung’s focus to be competitive in both price and performance seems to have paid off.  However, Samsung’s outsourcing of some A-series smartphone manufacturing to Chinese ODMs since last year will drive some share gains for Qualcomm and Mediatek. Further, the proliferation of 5G smartphones in the US and China will increase Samsung’s dependence on Qualcomm chipsets in its flagship and high-tier smartphones in the region.

Figure 2: Global Smartphone AP share by Vendor & Key Markets, 2019

Application Processor Market Share by Region 2019

Commenting on Samsung’s chipset strategy and outlook, Research Analyst, Shobhit Srivastava, adds, “At the same time, Samsung is horizontally scaling with an aim to sell its 5G SOCs to Chinese brands this year which will drive Exynos chipset volumes in 2020. Further, Samsung is also increasingly adopting its Exynos Series SoCs across its own portfolio designed and manufactured in-house for sales beyond the US, Japan and China. This will offset the design outsource volume losses to the alternate suppliers. As a result, we estimate that Samsung’s overall share of the smartphone application processor is estimated to grow further in 2020.”

As the arrival of 5G accelerates growth in 2020, 5G integrated chips (mostly sub-6GHz) will start to factor in as a competitive advantage to push the 5G across price-tiers. These chips, which combine the 5G modem and a high-performance mobile AP into a single chip, will not only take up less space within the smartphone, but will also reduce power consumption by performing communication and data processing on the single chip. We estimate the cheapest 5G smartphone powered by integrated 5G SoC as a result to go sub-$300 in second half of 2020 with push by all major vendors from HiSilicon to Qualcomm to Unisoc to MediaTek to Samsung. However, we will continue to also see a two chip (discrete 5G modem) solution in premium segment driven by upcoming  5G Apple iPhones and Qualcomm Snapdragon 8 series 5G smartphones.


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