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Counterpoint Quarterly: IoT Q3 2023

Counterpoint
Quarterly

IoT EDITION

PDF | 31 pages
Published date: November 6th 2023

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Counterpoint Quarterly: IoT Q3 2023

Counterpoint
Quarterly

IoT EDITION

PDF | 31 pages
Published date: November 6th 2023

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Counterpoint Quarterly: Smartphone Q3 2023

Counterpoint
Quarterly

SMARTPHONE EDITION

PDF | 114 pages
Published date: October 19th 2023

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MediaTek Records Strong Revenues. Mid-teens Growth Expected Through 2025

  • 2021 saw record revenues of $17.6B, growing 53% annually (2020 $11.5B). and operating margin both increased for the fourth consecutive year, driven by investment in 5G, Wi-Fi 6 and low-power technology.
  • 4Q 2021 revenues were down sequentially 2% and up 33.5% YoY. The sequential decline was due to a reduction in smartphones revenues (down 9% QoQ).

MediaTek Revenue by segment 4Q 2021

Exhibit 1: MediaTek Revenue, Sales to Gross Profit, R&D & Operating income

  • Its smartphone chipset volumes declined this quarter due to the high shipments in the first half and inventory corrections from Chinese smartphone OEMs. Because of the supply chain constraints, many customers built chipset inventory to manage uncertainties in the supply situation. The chipset inventory increased again this quarter due to the market situation.
  • Guidance for 1Q 2022, Revenue $4.7-$5.1B up 2-10% sequentially driven by flagship chipset (Dimensity 9000) for smartphones, and higher 5G penetration which will offset the lower seasonal demand. Also, the increase in the chipset pricing after TSMC’s hike in wafer price is reflected from Q4 2021 onwards.
  • Growth Outlook: In 2022 revenue growth to exceed 20% with a gross margin target of 48% to 50%, owing to a better product mix and strong technology migration. 2022 is going to be another strong year as the foundry supply becomes more manageable. Mediatek already has the needed capacity with TSMC.
  • It expects TAM to grow from $2.8B in 2021 to $5.1B in 2024. CAGR of mid-teen % for the next three years, with all revenue groups growing.
  • Mobile to grow from $1B in 2021 to $1.8bn in 2024
  • Smart Edge to grow from $1.4B in 2021 to $2.8B in 2024
  • Power IC to grow from $0.3B in 2021 to $0.5B in 2024
  • According to Counterpoint’s Smartphone Chipset Shipment forecast, we expect MediaTek to lead the smartphone chipset market with a 39% volume share in 1Q 2022 followed by Qualcomm with 29%.
  • Mediatek has guided long term revenue growth, but most revenues will still be driven by smartphones. It will need to look for new growth areas either by investment or merger to remain competitive with Qualcomm, which is diversifying into Automotive, IoT, RF etc.
  • MediaTek has secured major Dimensity 9000 design wins across multiple Chinese OEMs e.g., Oppo, Vivo, Xiaomi etc. The first model is scheduled to launch in March. We expect MediaTek’s flagship (3/4/5nm nodes) chipset to gain a 9%-10% market share in 2022.
  • MediaTek’s 2022 blended chipset ASPs will be flat to slightly up due to the increasing mix of the 5G, flagship products. Further 4G chipset absolute revenues will be flat to a slight decline as the 5G chipset mix increases. According to Counterpoint’s Market Outlook service, 5G smartphone penetration is forecast to reach 54% of the total smartphone market, accounting for 800mn units.
  • MediaTek has design wins in the Automotive segment, with infotainment applications. It also has the potential of adding 5G modems and IoT modules with companies such as Quectel, Fibocom, etc. Right now, these are not big revenue drivers, but a couple of years down the line will drive significant volumes.
  • Notebooks/PC: With 5G modems, Wi-Fi 6/6E, Kompanio chipsets (for Chromebooks) it gained in the notebook segment in partnership with Intel and AMD.
  • Another area for growth is Consumer Premises Equipment (CPE) for global operators using both 5G modem and Wi-Fi chipset in the applications like Fixed Wireless Access (FWA) etc.
  • Extended Reality (XR) is a focus segment for MediaTek which will drive revenue. According to Counterpoint’s Extended Reality headset forecast, shipments are projected to grow about 10x from 11Mn units in 2021 to 105Mn in 2025.
  • MediaTek is investing in the core technology to drive growth, like 5G modem with low latency, mmWave support, next-gen. Wi-Fi, 6G, security IP etc.

MediaTek Captures Record 43% Share of Smartphone AP/SoC Shipments in Q2 2021

  • Qualcomm dominated the 5G baseband market with a 55% share.
  • Qualcomm has started dual sourcing from foundries to mitigate the supply chain constraints. We expect it to increase share with more wafer orders from TSMC’s leading nodes.

Seoul, Taipei, Beijing, New Delhi, London, Boston, Toronto, Hong Kong – September 6, 2021

Driven by the rapid growth of 5G smartphones, global smartphone AP (Application Processor)/SoC (System on Chip) chipset shipments grew 31% YoY in Q2 2021, according to the latest research from Counterpoint’s Foundry and AP/SoC service. In Q2 2021, 5G smartphone shipments grew almost four times compared to the same period a year ago.

Research Director Dale Gai said, “MediaTek dominated the smartphone SoC market with its highest ever share of 43%, driven by a competitive 5G portfolio in the low-mid segment and without major supply constraints. Relative to Qualcomm, MediaTek benefited from less supply constraints in the first half of 2021, including with RFICs (radio-frequency integrated circuits), power management ICs (PMIC), and stable production yields from TSMC. 4G SoC shipments further helped MediaTek to strengthen its leading position.”

Global Smartphone AP/SoC Shipment Market Share (%), Q2 2020 vs Q2 2021

Global Smartphone APSoC Shipment Market Share Q2 2020 vs Q2 2021

Source: Counterpoint Research – Quarterly AP/SoC/Baseband Shipments Tracker, Aug 2021

Commenting on the growth of 5G smartphone baseband shipments, Research Analyst Parv Sharma said, “Qualcomm dominated the 5G baseband market with 55% share. It gained from the 5G baseband modem chipset win in the Apple iPhone 12 series and the significant demand for its complete 5G SoC chipsets, from the flagship 8 series to affordable 4 series. However, Qualcomm would have shipped more chipsets if the San Diego vendor wouldn’t have been affected by the supply-side constraints and yield issues during the first half of 2021. As a result, Qualcomm diversified and secured extra capacity starting at TSMC and other foundries for various components in late Q2 2021. This should help the vendor streamline its component supply and regain the share lost to MediaTek in the coming quarters.”

Global 5G Smartphone Baseband Shipment Market Share (%), Q2 2020 vs Q2 2021

Global 5G Smartphone Baseband Shipment Market Share

Source: Counterpoint Research – Quarterly AP/SoC/Baseband Shipments Tracker, Aug 2021

Summary:

MediaTek: Dominated the smartphone SoC market with a 43% share in Q2 2021. It gained share in the low-mid segment 5G portfolio. LTE SoC further helped it to strengthen its market position.

Qualcomm: Was comparatively more affected by the component supply constraints and lower yields at the foundry. However, it dominated the 5G baseband modem shipments with a 55% share. Qualcomm has realigned its component sourcing strategy, which should boost its supply and earnings.

Apple: With consistent healthy demand for the premium iPhone 12 series, Apple maintained its third position in the smartphone SoC market in Q2 2021 with a 14% share.

UNISOC: Its smartphone AP chipset shipments more than doubled in the first half of 2021 compared to the first half of 2020. This year, the company has succeeded in expanding its customer base, securing a series of design wins with major OEMs like HONOR, realme and Motorola. Improved acceptance of UNISOC-powered smartphones by Chinese consumers is a positive signal for its growth. It captured the fourth position in the quarter with a 9% share.

Samsung Exynos: It slipped to the fifth position with a 7% share as it is in the middle of rejigging its smartphone portfolio strategy of in-sourcing as well as outsourcing to Chinese ODMs. As a result, the share of MediaTek and Qualcomm has been growing across Samsung’s smartphone portfolio, from the mid-range 4G and 5G models manufactured by ODMs to the flagship ones.

HiSilicon: Affected by the US trade ban, Huawei was unable to manufacture the HiSilicon Kirin chipsets. The accumulated inventory of Kirin SoCs is on the verge of being exhausted. As a result, Huawei launched its P50 series with the latest Qualcomm SoCs but limited to 4G capabilities.

For our comprehensive research on foundry to chipsets to devices, feel free to get in touch with us at the contacts given below.

Background:

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts:

Dale Gai

 

Parv Sharma

Follow Counterpoint Research
press(at)counterpointresearch.com

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Foundry Node Migration to Shape Smartphone SoC Zero-sum Game

  • MediaTek’s sufficient capacity support from TSMC’s 6/7nm is attributed to its market share gains in 2021. Its next flagship 5G SoCs, under TSMC’s 4/5nm during H1 2022, will enter the top-end merchant market.
  • We do not expect foundry supply for AP/SoC in 2022 to be a major concern after capacity expansion and yield improvement. The competition in 5G AP/SoCs will further intensify, as Qualcomm seems more aggressive on wafer orders to maintain its leading position.
  • By 2025, 60% of global smartphone AP/SoCs will adopt foundry nodes at 5nm and below, one of the major driving forces of capacity expansion in TSMC and Samsung Foundry.

 New Delhi, Hong Kong, Seoul, London, Beijing, San Diego, Buenos Aires – May 12, 2021

The global foundry strategy and chipset demand-supply dynamics are shaping the smartphone SoC competition. According to our latest research, due to the changing market dynamics, MediaTek is poised to dominate the overall smartphone chipset market in 2021 while Qualcomm is expected to do the same in fast-growing 5G smartphone chipset market. The competition has never been so fierce, as MediaTek has narrowed the gap with Qualcomm.

MediaTek and Qualcomm a Zero-sum Game

Talking about the importance of advanced process nodes for future 5G smartphone growth, Research Analyst Parv Sharma said, “For mainstream 5G smartphones, 6nm and 7nm are the major foundry nodes offering the best performance and price to AP/SoC vendors looking to more than double their shipment growth in 2021. MediaTek has successfully secured TSMC’s capacity since last year for its Dimensity 5G chipsets, a turnaround from 2019. This has helped MediaTek to go aggressive in targeting the high-volume sub-$250 (mid-tier) 5G smartphone segment. For example, we believe MediaTek’s allocations for OVX (OPPO, vivo and Xiaomi) are on the rise, from the 20-30% levels of 2020 to over 40% in 2021, coupled with a better supply outlook for these high-growth OEMs and their 5G portfolio ambitions. On the other hand, Qualcomm chipsets have been constrained for the first half of 2021, directly benefitting MediaTek as this has become a zero-sum game.”

Sharma added, “Qualcomm suffered from production constraints at 5nm in Samsung, and for other supporting peripheral ICs, in the first half of 2021. However, our supply chain checks indicate Qualcomm will catch up in the second half of 2021, securing more capacities from TSMC and other foundries to improve the supply and yield at Samsung in the coming months. This should allow the San Diego-based vendor to target the mainstream 5G market, mainly in China and elsewhere, with its Snapdragon 4, 6 and 7 series chipsets. 5nm is the most advanced node, which will be mainly used for 5G premium/flagship models during 2021. All eyes will be on Qualcomm to see whether it diversifies its foundry strategy in 2022 and takes some capacity share away from Apple, which leads in the advanced node capacity shares for its high-demand A and M series chips”.

This should help widen the lead in terms of value/revenue where Qualcomm benefits from a better product mix, with greater demand for its higher-ASP Snapdragon 7 and 8 series chipsets. Qualcomm’s system-level integrated offering expands the overall semiconductor opportunity from SoC to RFFE. Qualcomm is generations ahead when it comes to premium offerings, from SoC to connectivity (like mmWave).

Counterpoint Research Smartphone SoC Shipments Outlook for Top Four Vendors by Foundry Nodes - 2021
Source: Counterpoint Research, Foundry-SoC Tracker, May 2021

Looking into 2022, our initial thoughts on technology trends point to the migrations of more 4nm/5nm designs by Qualcomm and MediaTek. Commenting on the research, Research Director Dale Gai said, “MediaTek’s next-generation flagship 5G SoC models (still under the Dimensity series) will become the company’s milestone in smartphone chipsets by entering the SAM (Service Available Market) with the end-device price tag of over $500. This merchant market has been dominated by Qualcomm’s flagship models based on leading-edge foundry technologies”.

Gai noted, “MediaTek will likely debut the new Dimensity series, including 5nm/6nm chipsets, in H2 2021, followed by new 4nm/5nm chipsets during H1 2022, and even 3nm tape-out in H2 2022. These new products will have some meaningful technological breakthroughs for MediaTek, targeting China’s premium market with the majority of wholesale prices in the $400-$700 band. Qualcomm is expected to stay at Samsung for 4nm on its new flagship models in 2022, though diversification would be the key moving forward. Apple appears to be the leader again, migrating to 3nm at TSMC in H2 2022. Compared to 2021, capacity constraints for AP/SoC in 2022 may not be the major concern since the effective capacities of 5nm from both TSMC and Samsung Foundry are expected to increase during this year.”

Smartphone SoC Migration Roadmap

Our foundry-to-smartphone AP/SoC research not only takes the bottom-up approach to analyze the near-term demand but also forecasts the long-term trend to see if a foundry could offer enough capacity in the leading nodes.

Counterpoint Research Smartphone SoC-AP Wafer Demand by Foundry Nodes, 2020-2025
Source: Counterpoint Research, Foundry-SoC Outlook, May 2021

Commenting on the outlook for foundry nodes migration, Gai said, “We estimate that by 2025, 60% of total smartphone AP/SoCs will be fabricated in most advanced foundry nodes, including N5, N3 and even N2. Larger average die size, lower throughputs from increasing EUV layers, and higher yield rate uncertainties beyond 3nm are the likely drivers for more wafers in foundries processing the cutting-edge technology nodes for smartphone SoCs. The N5 node, which brings significant PPA (power, performance and area) enhancement from N7 and N10/12, will be a long node under the foundry roadmap for most Android-based 5G SoC migrations in the next two years. The total wafer consumption of N5 (including 4nm and 5nm) will account for roughly 25-30% of total built-in N5 capacity in the foundry industry during 2023-2024 (excluding Intel Foundry Services).”

Gai added, “Monitoring this outlook is crucial for the SoC vendors, smartphone OEMs and other upstream/downstream players to plan and align their mid- to long-term roadmaps with the forecasted available foundry capacity.”

For our comprehensive research on foundry to chipsets to devices, feel free to contact us at the contacts below.

Background:

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts:

Dale Gai

 

Neil Shah

Parv Sharma

Follow Counterpoint Research
press(at)counterpointresearch.com

Related Posts

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Counterpoint Quarterly Q3 2023

IoT

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Counterpoint Quarterly

Smartphone Edition

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