Qualcomm chipsets Archives

Qualcomm Revenue Declines on Demand Weakness Across Handsets, IoT products

Automotive and IoT segments were the bright spots and remained on a growth trajectory.
H1 2023 will see inventory correction with some demand coming back in H2 2023.
The current weakness in the semiconductor industry is more cyclical than structural.

The fabless semiconductor industry has been posting weaker Q4 2022 revenues due to cyclical headwinds, weak global macroeconomic conditions and COVID-19 pandemic. After MediaTek’s muted numbers, Qualcomm has also reported a decline during the quarter. QCT’s (Qualcomm CDMA Technologies’) revenues declined 11% YoY in Q4 2022 (Q1 in Qualcomm’s FY2023) to $7.9 billion while QTL’s (Qualcomm Technology Licensing’s) revenues declined 16% to $1.5 billion due to weak handset sales. The automotive segment grew 58% YoY to $456 million driven by the Snapdragon digital chassis.

The outlook for H1 2023 remains weak, almost in line with MediaTek’s view. Inventory drawdown will happen in Q1 2023 and Q2 2023. Also, according to Counterpoint, the smartphone market will see flat growth on an annual basis. But the momentum is expected to come back in H2 2023 with inventory restocking and China reopening. To maintain healthy growth margins, we expect pricing discipline and an increase in the cost of new chipsets.

Sources: Qualcomm, Counterpoint Semiconductor Tracker

October-December quarter analysis

In Q4 2022, Qualcomm’s revenues declined 12% YoY to reach $9.5 billion.
QCT’s chipset revenues declined 11% YoY to $7.9 billion and QTL’s licensing revenues declined 16% to $1.5 billion due to weak handset sales.
Within QCT, handset revenues declined 18% YoY to $5.7 billion. From Q4 onwards, RFFE revenues are being accounted for within each sub-segment. Qualcomm’s share in the Samsung Galaxy S23 series has grown from 75% to 100%. Overall, the higher inventory is affecting the handset business revenue.
IoT revenues grew in single digits (7%) because of Edge Networking from the Wi-Fi access points and gateway routers.
The automotive segment grew 58% annually to $456 million driven by the Snapdragon digital chassis.
According to our RFFE report, Qualcomm’s RFFE revenues declined 18% YoY in Q4 2022. Handsets captured a dominant share in RFFE revenues. Qualcomm, which is already a leader in smartphone RFFE, has so far designed a win pipeline of over $900 million in the automotive segment and $405 million in revenues in the IoT segment.

Outlook

According to the Counterpoint Market Outlook service, the smartphone market will be flat YoY in 2023. H1 2023 will see inventory correction while some demand will come back in H2 2023. We forecast excess smartphone AP/SoC inventory to return to normal levels by the end of H2 2023.
FWA continues to have a big potential in driving IoT revenues, aided by both Sub-6GHz and mmWave. In India, Jio has publicly stated it will cover 100 million homes. Qualcomm is an investor in Jio and will gain from the modem and Wi-Fi-based content in 5G FWA.
In 2021, Qualcomm acquired NUVIA, which enables custom CPU and design. Qualcomm has developed custom Oryon CPUs on ARM. This will further drive growth. We expect Arm-based laptops to have a 25% market share in five years.
Further migration to Wi-Fi 6/6E, Wi-Fi 7, mesh networks and smart utility meters, trackers, e-mobility, parking meters, home automation and security, and other location-based solutions in the industrial sector is a key revenue driver.
Qualcomm guided 2023 revenues in the range of $8.7 billion to $9.5 billion and non-GAAP EPS of $2.05 to $2.25. Their midpoint guidance includes an assumption of lower-end market demand and continued drawdown of channel.

The current weakness in the semiconductor industry is more cyclical than structural. We expect H1 2023 to be weak. With China opening up and inventory drawing down, H2 2023 will see some growth coming back to the market as OEMs start restocking and preparing for flagship launches. Also, on top of premium chipsets, there is an opportunity for Qualcomm in the low-mid AP/SoC which has been affected more than the premium segment. Qualcomm will try to get some share back from MediaTek in the low-mid segment.

Qualcomm Delivers Record Revenues Amid Challenging Macro Environment

Growth comes in a year that is seeing multiple macroeconomic headwinds.
With its big win at Samsung, Qualcomm’s share in the Galaxy S flagship for 2023 will grow to 100%.
Qualcomm has extended its license with Apple. It will now supply most of the modems to iPhones in 2023.
H1 2023 will be weak, but Qualcomm has strong fundamentals for long-term growth.

Qualcomm has reported record revenues for its July-September quarter, which is also the last quarter of its financial year. The top line grew 22% YoY to $11.4 billion. This growth comes in a year that is seeing multiple macroeconomic headwinds, with most semiconductor companies struggling with weakening consumer sentiment. Qualcomm has been somewhat immune to this due to its growing business diversification beyond smartphones, like in IoT (FWA, Windows on Snapdragon, industrial IoT and Connected edge) and automotive. Within smartphones as well, Qualcomm’s strategy to focus on the premium 5G segment and increase the share of semiconductor content from SoC to RFFE has helped the company register some growth even though the overall smartphone demand has been softening.

The outlook for the next financial year remains weak due to the ongoing macroeconomic turbulence, prolonged Russia-Ukraine war, energy crisis, rising inflation, China’s COVID-19 restrictions and market exiting with higher-than-normal channel inventories. As a result, despite a strong performance, Qualcomm, going forward, is focusing on prudently managing operating expenses, freezing hiring, reducing expenditure in matured product areas and optimizing selling, general and administrative expenses (SG&A) for targeted R&D investment in growth areas such as automotive and IoT.

Sources: Qualcomm, Counterpoint Semiconductor Tracker

July-September Quarter Analysis:

In Q3 CY2022, Qualcomm’s recorded revenues grew 22% YoY to reach $11.4 billion.
QCT (chipset) business revenue increased 28% YoY to an all-time high of $9.9 billion, while QTL (licensing) business revenue declined 8% YoY to $1.4 billion due to weaker smartphone unit sales resulting in lesser royalties.
Within QCT, handset segment revenues reached $6.6 billion, growing 40% YoY. Handsets contributed around 66% of the total QCT revenues. The smartphone SoC shipments were driven by strong adoption of the flagship Snapdragon 8 Gen 1 and Snapdragon 778G series in the premium and high-end segments respectively.
IoT revenues were up 24% YoY to reach $1.9 billion in Q3 CY2022 driven by edge networking and industrial IoT. Qualcomm signed a multi-year agreement with Meta for AR/VR on Snapdragon chipsets. Meta’s Quest Pro has three chipsets from Qualcomm – Snapdragon XR 2+ in the headset and two Snapdragon 662 in the controllers. This is a significant win in the Meta Quest Pro Bill of Materials (BoM)
Strong traction from the Wi-Fi 6/6E solution, next-gen Wi-Fi 7 solution, 5G FWA and Windows on Snapdragon, Robotics, and edge processing will drive the overall IoT revenues going forward.
Auto revenues reached $0.4 billion, growing 58% YoY driven by Snapdragon Digital Chassis. Qualcomm has an auto design win pipeline across connectivity, digital cockpit and ADAS worth over $30 billion. This shows Qualcomm’s diversification is working and will be a big revenue stream going forward.
RFFE revenues declined 20% YoY to reach $992 million due to the continued weakness of the handset market and channel inventory. According to Counterpoint’s Smartphone RFFE Revenue Tracker, the 2022 growth forecast for the smartphone RFFE market has been revised to the low single-digit range (1%~3%) to reflect the greater-than-expected impact on demand for RFFE components. Qualcomm, which is already a leader in smartphone RFFE, has designed a win pipeline of greater than $900 million in auto and $405 million in revenues within IoT.

Outlook

In the lucrative 5G discrete baseband modem business, Qualcomm has extended its license with Apple and will be supplying most of the modems to new iPhones launching in 2023 with sales continuing through 2024.
Beyond 2024, the contribution from Apple will be subject to how successful Apple is in building its first baseband capability, either integrated within SoC or discrete. So far, it has been a struggle to build its first in-house modem capabilities.
Another big win is with Samsung as the share of Qualcomm solutions within the Galaxy S series flagship for 2023 will grow to 100% from 75% in the Galaxy S22. The fact that the world’s leading and vertically integrated Android vendor has chosen Qualcomm’s Snapdragon flagship SoC for its flagship models, from the S series to foldable, shows how Qualcomm is dominating the premium smartphone segment with its SoC capabilities.
As we have highlighted before, it is difficult to develop an end-to-end smartphone solution from SoC to RFFE. Qualcomm, with its forward integration capabilities, is the only game in town when it comes to high-to-premium-tier solutions. The entry of MediaTek’s 9200 will ignite some competition but the performance and capabilities remain to be seen as Qualcomm is generations ahead when it comes to AI, camera, 5G baseband, RFFE and so forth.
Qualcomm’s guidance for Q4 CY2022 forecasts $9.2 billion to $10 billion revenue, non-GAAP EPS of $2.25 to $2.45, QCT revenues at $7.7 billion to $8.3 billion and EBT margins of 26% to 28%, and QTL revenues of $1.45 billion to $1.65 billion. Both the handset and IoT revenue streams are expected to be down sequentially.
There is 8-10 weeks of elevated inventory in the channel, which will take a couple of quarters to come down. Qualcomm also pointed out inventory correction in the premium segment as well as smartphone OEMs undergoing correction. But the overall impact of the Samsung Galaxy S series win will not be significant as China’s market remains weak.
Qualcomm’s financial year has been impacted by macroeconomic headwinds and extended China COVID-19 restrictions. This has resulted in demand weakness and temporarily elevated channel inventory across the industry.

Overall, the inventory correction will take two quarters. H1 2023 will be weak, something that has also been pointed out by other semiconductor vendors. A cautious approach is needed for CY2023 due to the weak macroeconomic situation, which is more of a cyclical adjustment. Qualcomm has strong fundamentals for long-term growth. Its design wins are growing for both the auto and IoT segments. The diversification strategy will help the company drive long-term growth

MediaTek Weather’s Macroeconomic Headwinds With 9% YoY Revenue Growth

MediaTek‘s revenues fell 8.7% sequentially but increased 8.5% YoY to NT$142.1 billion. On a USD basis, revenues were comparatively flat due to FX weakness. Global macro headwinds, inventory correction, slow China market and weak consumer demand led to the revenue decline and weak outlook. Declining 8% QoQ, the smartphone segment contributed to 55% (NT$ 78.2 in Q3 2022) of MediaTek’s total revenue in Q3 2022. Smartphone segment demand was affected by customers’ inventory adjustments, especially in the 5G mid-range SoCs. Demand for LTE SoCs was strong in QoQ terms.

The company has expanded its portfolio for the flagship and mid-range segments by launching Dimensity 9000+ and Dimensity 1050, respectively. The newly launched premium SoC has been adopted by top-end gaming smartphones. Also, MediaTek will launch a next-generation flagship SoC in Q4 2022. This will add to its premium segment revenue.
The Smart Edge segment, which contributed 38% to the company’s revenue in the third quarter, declined 9% QoQ as telecommunication operators cut back on orders, negatively impacting the company’s Wi-Fi and wired businesses. Also, the consumer market weakness affected the tablet, Chromebook and monitor businesses.
The power IC segment, which accounted for 7% of MediaTek’s revenue in Q3 2022, declined 17% QoQ due to weak demand for power ICs in consumer devices such as smartphones and PCs. But demand for power ICs for automotive and industrial applications remained robust in Q3 2022.
MediaTek guided Q4 2022 revenues in the range of NT$108 billion to NT$119.4 billion ($3.4 billion to $3.8 billion), a decline of 16%-24% QoQ and a decline of 7%-16% YoY. The gross margin is expected to be around 48.5% and the operating expense ratio is expected to be 31%. LTE SoCs will decline more severely than 5G SOCs in Q4 2022. Wi-Fi, broadband and routers will also be impacted as some of the Wi-Fi operators will slow down their fourth-quarter buy-in. The company also projected a sequential increase in revenues in Q1 2023.
The inventory level came down in Q3 2022 compared to the previous quarter. For both 4G and 5G, SoC inventory will come down in Q4 2022. Inventory corrections will be normalized in H1 2023.
According to Counterpoint Research’s Smartphone AP/SoC Shipment Tracker, MediaTek dominated the smartphone AP/SoC market in Q3 2022 with a share of 36.5%, followed by Qualcomm. MediaTek shipments have declined due to order cuts from major Chinese OEMs. MediaTek’s relatively greater dependence on the mid-end and low-end smartphone segments, which are likely to be more affected by the current macroeconomic situation as well as excess channel inventory, will lead to a weaker fourth quarter.

Overall, weak market outlook for Q4 2022 from MediaTek echoes increasingly cautious views from the foundry and IC packaging makers, which are seeing a slowdown in smartphone IC orders in early 2023. We expect 2023 to be challenging with inventory correction going on till H1 2023 and coming down to a normal level (80-90 days) by the end of 2023. The demand outlook for 2023 also looks challenging after inventory corrections due to macroeconomic uncertainty and weak China market. From the technology migration point of view, 5G SoCs are going to be a growth opportunity for the company. MediaTek will focus on maintaining gross margin, following price discipline at a time of uncertainty in the global semiconductor industry.

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.
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.

Despite macroeconomic headwinds, Qualcomm delivers a large quarter

Despite macroeconomic headwinds and investors’ angst with a declining smartphone market, Qualcomm reported great quarterly results. Qualcomm was aided by its one technology roadmap which connects the intelligent edge, even during a weak smartphone market. There were two major stories of the quarter. First, despite a shrinking smartphone market, which Counterpoint Research Market Outlook predicts will decline by 3% in 2022, Qualcomm’s handset business grew a whopping 59% YoY. Despite weakness in the low and mid-tier smartphone market written often about within Counterpoint Research, Qualcomm benefitted from its focus on the high-tier and a favourable mix of handset chips.

The second large story of the quarter was that Samsung and Qualcomm inked a licensing agreement through 2030 and the 6G era. Qualcomm will power future Galaxy devices with high-end Snapdragons within smartphones, PCs, tablets, and XR. Qualcomm’s percentage of Galaxy devices will likely continue to grow. Note that Qualcomm is currently designed into about 75% of the Galaxy S22 family. Qualcomm specifically highlighted that the same royalty terms are in place. This means it is highly likely other OEMs will agree to the same royalty terms upon renewal. Huge win for Qualcomm.

Source: Qualcomm Investor Relations

Other highlights from the quarter:

The design wins within automotive continue. Its digital chassis solutions revenue pipeline increased to $19 billion, up $3 billion YoY. Its latest design win is CARIAD, Volkswagen Group’s software company. CARIAD will use Qualcomm’s system-on-chips (SoCs) to enable its assisted and automated driving functions up to Level 4. This solution delivers 700 TOPs (trillions of operations per second).
IoT revenues grew 31% YoY driven by edge networking and industrial IoT with combined revenue growth of more than 40%. Qualcomm will profit from the growth of Windows on Snapdragon and ARM-based computing. There are over 225 enterprise companies, more than 100 ISVs, and over 15 channel partners supporting the Snapdragon compute platform. Price points and performance continue to expand the value proposition. Further edge networking, Wi-Fi 7, and the robotics platform will be a key segment for growth for IoT.
Qualcomm recently announced a new wearables platform, which saw a large leap in specs. Briefly, it is built on a 4nm process, 50% lower power consumption, 2x performance, and 30% smaller size. This redesign will push more processing to the co-processor. The power upgrade vastly helps kids/senior watch space. 4nm & performance will enable new sensors and the high-end. This will vastly help the smartwatch space allowing for better tracking (think kids/seniors), better health monitoring, and new applications in development. It remains a hurdle that too often the smartwatch is on the charger and not collecting data on the wrist. Qualcomm’s solution will greatly help this. OEMs will be able to scale with two platform options. There are 25 design wins and growing.
RFFE grew 9% on an annual basis and will be a key part of Qualcomm’s diversification strategy. A large share of the Qualcomm RFFE is driven by smartphones. As per Counterpoint’s Smartphone RFFE Revenue report, Qualcomm led the smartphone RFFE market with 23.5% in Q1 2022. Qualcomm has a complete modem-to-antenna solution for 5G thereby supplying the end-to-end needs of smartphone OEMs. In the coming years, RRFE growth will come from Auto and IoT. The current RFFE design pipeline for the automotive segment is around $900 million. Also, in IoT, there is an opportunity for next-generation Wi-Fi (Wi-Fi 7) and Bluetooth for RFFE modules. The ASP growth in RFFE content from mid-end to premium smartphones is less when compared to mid-end and premium smartphone chipsets.
There were limited comments about Qualcomm’s move into open, virtualized 5G RAN. However, the company recently announced partnerships with Hewlett Packard offering a next-gen 5G virtual DU solution. Qualcomm’s differentiation is lower power requirements, which the company explains are 60% lower for operators. The move to open RAN will likely be a rolling change with potentially more of a shift during the 6G transition.
Qualcomm guided Q3 2022 revenues in the range of $11 billion to $11.8 billion driven by the Auto and IoT segment in QCT. Considering the global macro-economic conditions and the slowdown in consumer product purchases, Qualcomm’s forecast for the handset has been reduced to mid-single digits. Qualcomm can mitigate revenue declines if the premium segment performs much better than the low and mid-tiers.

Revenue growth this quarter was driven by the handsets due to a higher premium mix, automotive was driven by the digital cockpit solution, and demand in edge networking and industrial IoT in the IoT segment. Looking at the second half of 2022, handsets may be affected by slowing consumer demand, similar to some applications in consumer IoT. But, automotive and IoT (industrial and edge) will continue to drive growth.

Qualcomm Dominates Premium Android Smartphone Chip Market in Q1 2022

Both Qualcomm and MediaTek posted healthy growth in Q1 2022. MediaTek recorded an impressive set of numbers for the quarter with revenues growing 32% YoY and 10.2% QoQ to reach $4.8 billion. Qualcomm saw its third consecutive quarterly record revenue in Q1 2022 at $11.6 billion. Its business units recorded annual growth of between 28% and 61%.

MediaTek led the Android smartphone SoC market in 2021 with a 44% share, followed by Qualcomm with 35%, according to the latest research from Counterpoint’s Global Handset Model Sales Tracker.

Qualcomm’s focus on the premium smartphone segment (>$500) has helped it to grow revenues. Its Snapdragon 800 series and Snapdragon 700 series, notably the flagship Snapdragon 8 Gen 1 and Snapdragon 778G, are both key volume drivers. Furthermore, Qualcomm has gained a 75% share of Samsung’s Galaxy S22 series shipments. In previous Samsung flagship models, there was a more equitable split between Qualcomm Snapdragon-powered SKUs and Samsung Exynos-powered SKUs. Qualcomm is also driving more revenues with its RFFE (RF Front End), allowing it to capture a higher share in the BoM.

MediaTek dominates the low-mid tier wholesale price segment ($100-$299), driven by its Dimensity 700 and Dimensity 900 series. Also, the 4G SoC in the <$199 price band is driven by the P35, G80 and G35 chipset models. MediaTek has entered the premium segment with the Dimensity 9000 series, but the sales will only start to pick up in Q2 2022.

AP Chipset Share for Android Smartphones by Price Band, Q1 2022

Qualcomm

Qualcomm is focusing on the premium (>$500) and mid-high ($300-$499) segments for revenue growth. Qualcomm is an industry benchmark when it comes to premium smartphones.
Qualcomm’s focus is on the 7 and 8 series Snapdragon chipsets, which drive higher revenue and profitability. Qualcomm acknowledged it has seen a slowdown in the low- and mid-price tiers. But this was more than offset by strong premium-tier sales.
Further, the design wins with 75% of sales of the Galaxy S22 family, up from 45% of the S21 family, helped Qualcomm strengthen its position in the premium Android segment in Q1 2022.
According to Counterpoint’s Global Smartphone AP-SoC Shipments and Forecast Tracker, the premium segment Qualcomm Snapdragon 700 and 800 series contributed around 68% of the AP/SoC shipments in Q1 2022.
Qualcomm’s share in the >$500 band increased from 47% in Q1 2020 to 71% in Q1 2022, growing 23% YoY in Q1 2022, owing to the launch of its Snapdragon 888 and Snapdragon 8 Gen 1 chipsets.
Focus on the premium segment will help Qualcomm ride out the slow China market, global macro-economic situation and high inventories.

MediaTek

MediaTek dominated the <$299 price tier and drove significant volumes both for 4G and 5G in this tier. Entry of the Dimensity 9000 enables MediaTek to capture share in the premium band (>$500). This is the first time MediaTek has entered this tier. MediaTek has already announced design wins with Chinese smartphone OEMs like OPPO, vivo, Xiaomi and HONOR. This opens more competition and opportunities for growth in the premium segment.
The volume in the ≤$99 price band was driven by LTE smartphones, where MediaTek captured a 47% share. LTE SoCs have been affected by the ongoing shortages and will be in short supply in 2022.
In the $100-$299 price band for Android, MediaTek captured a 60% share in Q1 2022 driven by its Dimensity 700 and 900 series.
MediaTek will continue to gain share in the $100-$299 price band as 5G penetrates markets like India, APAC others, LATAM and MEA. Smartphone OEMs like Xiaomi, Samsung, OPPO and vivo will likely launch affordable 5G smartphones under $200.
MediaTek has entered the premium segment with its Dimensity 9000 series. However, the sales are only expected to pick up in Q2 2022.
Overall, we forecast around an 8% share for MediaTek in the premium segment in 2022. MediaTek growth in Q2 2022 is expected to come from mid-high range phones due to the shifting of demand from LTEto 5G AP/SOCs. Further, with the launch of the Dimensity 8000 series, MediaTek wants to focus on and consolidate the $300-$499 price bands. This will also help MediaTek pivot volumes from the low-mid segment to mid-high to premium segments.

Samsung

Samsung Exynos’ share declined in Q1 2022 due to the loss in share to Qualcomm in the Galaxy S22 series and also due to the low yields of the 4nm premium Exynos chipsets.
Share in the premium segment declined from 34% in Q1 2021 to 23% in Q1 2022.
Samsung has launched the Galaxy A33 and A53 with its Exynos 1280 SoCs. These are the volume drivers that will help it to regain share from MediaTek and Qualcomm through the rest of 2022.
In the low-mid segment ($100-$299), Samsung’s share declined to 7% in Q1 2022 from 10% in Q1 2021 due to outsourcing of its models (A, F and M series) to ODMs, which integrated mostly Qualcomm, MediaTek or UNISOC solutions in different models depending on the target price bands.
In the low tier, Samsung is using UNISOC SOCs in the Galaxy A03 smartphone. The share of Samsung smartphones is almost negligible in this segment.

UNISOC

UNISOC continues to gain share in the low bands (<$99) driven by the LTE portfolio. Its share in the <$99 band grew to 47% in Q1 2022 from 20% in Q1 2021.
With realme, HONOR, Motorola and Samsung launching phones with its Tiger series SoC, UNISOC has expanded its customer base with design wins at ZTE and TECNO and entry into the Samsung Galaxy A series.
It has also captured an 8% share in the $100-$199 price band with HONOR, realme and Samsung.
For 2022, we expect UNISOC to maintain the momentum with its portfolio catering to LTE smartphones, as MediaTek struggles with supply issues for 4G chipsets and Qualcomm focuses on 5G solutions. Also, a few design wins with 5G chipsets will add to its overall volumes and help support its value growth.

HiSilicon

We expect HiSilicon volumes to decline in 2022 as the inventory is depleted. Huawei has already started using Qualcomm SoCs in its new launches, but these are limited to 4G due to the prevailing US sanctions.

Entry Into Flagship Segment, 5G AP/SOCs Lead to Strong Growth for MediaTek in Q1 2022

MediaTek recorded an impressive set of numbers for Q1 2022 with revenues growing 32% YoY and 10.2% QoQ to reach $4.8 billion. The company’s mobile phone segment achieved a revenue of $2.7 billion, growing 29% YoY. According to Counterpoint Research’s Smartphone, AP/SOC Shipment Tracker, the addition of the Dimensity 9000 to the premium segment has added meaningfully to the overall revenues that have also been driven by 5G AP/SOCs in the mid-tier segment. LTE AP/SOCs are still attracting high demand and will be in tight supply throughout 2022. Based on our data, LTE AP/SOCs contributed to one-third of the total AP shipments in Q1 2022.

MediaTek Revenue by segment

The smart edge segment contributed 39% to MediaTek’s Q1 2022 revenues. This segment is mainly driven by the Wi-Fi 6/6E migration and higher-end solutions for smart TVs and tablets. Technology migration trends in smart edge platforms have led to a higher blended ASP in this segment.
The power IC segment accounted for 8% of the total revenues, growing 52% YoY and 21% QoQ. A large part of the PMIC segment’s revenue is coming from displays and smartphones. Automotive and industrial applications contribute to 10% of the PMIC revenue and will drive growth for this segment in 2022.
MediaTek guided revenues to be in the range of $5-$5.3 billion in Q2 2022, up 3~10% QoQ and 17~25% YoY. The mobile phone segment will show the strongest growth due to the shifting of demand from LTE to 5G AP/SOCs. As the China market is slowing, the revenue growth will come from other regions like India and Europe. Also, the Dimensity 9000 and 8000 series will continue to add to the revenues in Q2 2022. However, due to the slowdown in China and deteriorating macroeconomic conditions, we have reduced our H2 2022 forecast for the Dimensity 9000.
Revenues from Wi-Fi 6, 5G SIM modem, 5G tablet, 10G-PON and 4K smart TV are also expected to grow strongly in H2 2022. Also, MediaTek’s mmWave SOC is on schedule to ship in the second half of 2022. It will pave the way for MediaTek’s further expansion in the global market.
According to Counterpoint Research’s Smartphone AP/SOC Shipment Tracker, MediaTek will continue to lead the smartphone AP SOC market with a volume share of 41% in Q2 2022, followed by Qualcomm with 27%. The company’s strategy of 5G, Wi-Fi 6, focused product migration, geographic expansion with global customers, and penetration into high-end and flagship segments will allow MediaTek to retain and even improve its strong market position.
China slowdown, COVID-19 lockdowns and macroeconomic conditions will affect the global smartphone market. MediaTek guides flat growth for the smartphone market in 2022 and 5G penetration (660-680 million units) reaching 50%. Further, 5G penetration is expected to reach 70% in the next two years.
Smartphone OEMs like OPPO, vivo and Xiaomi currently have inventories with distributors and also for components like AP/SOCs, PMICs and DDICs. This has led to a drop in AP/SOC orders for MediaTek for H2 2022. But MediaTek is keeping a high inventory reserve this quarter to sustain its OEM and ODM partners during the worsening COVID-19 situation. MediaTek normally runs with around 90 days of inventory. But it has now raised this to around 100 days to manage potential supply constraints.
MediaTek sought to reassure investors that it would not follow a low pricing strategy to counter slowing demand. Instead, it will invest in future growth. Its pricing strategy will also leverage its high capacity and will manage profitability by maintaining similar pricing as the previous quarter. We expect overall 5G AP/SOC ASPs to be flat compared to last year. If the competition reduces the prices, it will be challenging for MediaTek to maintain growth in H2 2022. Due to the strong demand for LTE AP/SOCs, the ASPs will not decline this year. Overall, 5G AP/SOCs will have a premium pricing over LTE. The company is now focusing on developing 5G AP/SOCs for low-end phones priced less than $150. We believe this will happen two years down the line. However, based on our estimates, LTE is going to dominate the less than $100 smartphones, driven by regions like LATAM, Africa and APAC.
Presently, MediaTek is not a big player in the PC business, having only a few Chromebook-type devices in the market. The company played down its expectations for substantial growth in the PC sector while confirming that it was interested in the potential of the Arm-based PC market.
Smartphones still contribute 53% of the revenues for MediaTek. For longer-term growth, MediaTek has to reduce dependence on smartphones and expand into areas like the smart edge, automotive, connected PCs and AR/VR.

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

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

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

Galaxy Note 20 Ultra 5G costs $549 to Make and Highlights Qualcomm & Samsung’s Semiconductor Prowess

Seoul, Taipei, Hong Kong, Beijing, New Delhi, London, Boston, Los Angeles, Buenos Aires

September 9^th, 2020

The premium flagship smartphone segment has been the flag-bearer for the latest innovations as points of differentiation brands. While the premium segment is dominated by a handful of players such as Samsung, Apple, Huawei and OnePlus, depending on the markets, the competition has never been so intense.

Product designers at these brands have been meticulously integrating the latest technologies – from chipsets, through multiple system components, to design language, manufacturing techniques, optimized software and services to drive differentiation and boost the top and bottom lines. These efforts create a halo effect around the flagship models that trickles down to the rest of the portfolio to spark consumer aspirations on the demand side and scale on the supply side.

To help the industry better understand what constitutes a winning smartphone and who is driving the greatest innovations, Counterpoint’s Components research practice has been publishing deep-dive analyses on the latest Bill of Materials (BoM) and corresponding supplier design wins. Counterpoint’s latest assessment is on the recently launched Samsung Galaxy Note 20 Ultra 5G smartphone designed for the mmWave 5G networks.

Commenting on the research findings, Senior Analyst, Ethan Qi, highlighted, “Samsung has done an excellent job in designing, manufacturing and integrating multiple advanced technologies and components in a very thin and light form-factor compared to the previous generation flagship models, and with a competitive BoM cost structure. The total BoM cost achievement is slightly under $550 with the component cost making up around $468, which is a commendable for a device with a list price of $1299.”

Samsung has launched multiple SKUs for this model, a Qualcomm Snapdragon 865+ variant for some select key markets such as the USA, China, South Korea, and others, whereas an Exynos 990-based variant is destined for the rest of the world.

Mr. Qi, adds, “This mmWave version of the Note 20 Ultra 5G builds on Qualcomm’s reference design featuring the most advanced 5G SoC, the Snapdragon 865+, and the Snapdragon X55 5G Modem-RF System. The mmWave variant costs roughly 10% more than the sub-6 GHz variant in terms of total component costs. The device also features one of the most advanced camera sensors in a nicely integrated three-sensor module. Unlike the Galaxy S20 Ultra 5G, the Galaxy Note 20 Ultra 5G features a lower resolution telephoto lens, omitting the DepthVision sensor, and adding a laser auto-focus module optimized for faster focusing. Samsung CIS camera sensors have come a long way and compete fiercely with Sony for design wins.”

Design wins are a point of validation for component suppliers when OEMs choose their technology for a leading flagship product. For some brands, it also reveals the level of vertical integration or dependence on particular suppliers.

Highlighting the design wins, Research Director, Tom Kang, commented, “Samsung, with its multiple SKU strategy, has a varied level of dependence on vertically integrated internal suppliers and external suppliers. This requires sophisticated system integration. For example, with the mmWave Qualcomm variant of the Galaxy Note 20 Ultra 5G, Samsung contributes to roughly half of the costs of the total components, whereas, for the Exynos variant, Samsung’s share goes up to almost 70%. It is impressive to see Qualcomm’s share in a Samsung flagship exceed 40%, as it offers a fully-optimized system-level solution from SoC to the modem, RF and antenna system. Other important component design wins include NXP which combines UWB, Secure Element, NFC, and eSIM in a single solution. Other notable contributors include Qorvo, Largan Precision, Corning, and others.”

The exhibit below summarizes the BoM cost analysis. An expanded version with details of more than 100 key components and parameters influencing the device’s cost structure is available for clients.

Exhibit 1: SAMSUNG GALAXY NOTE 20 ULTRA 5G 128GB (mmWave) BoM Analysis

Exhibit 2: SAMSUNG GALAXY NOTE 20 ULTRA 5G 128GB (mmWave) Share of BoM by Supplier

Background:

Counterpoint Technology Market Research is a global research firm specializing in technology products in the TMT industry. It services major technology firms and financial firms with a mix of monthly reports, customized projects, and detailed analysis of the mobile and technology markets. Counterpoint’s senior team comes from technology firms such as Nokia, Samsung, LG, Vivo, China Mobile, TSMC, Qualcomm, Intel, Microsoft, Ford, NEC, Panasonic, Philips and more.

Follow Counterpoint Research

press@counterpointresearch.com

Analyst Contacts:

Ethan Qi

Qualcomm Brings Advanced AI, Gaming and Imaging Prowess to Snapdragon 6 & 7 Series Platforms

Growth in the global smartphone market declined annually for the first time ever in 2018. This was primarily due to the lengthening replacement cycles in key geographies such as the US, China, and parts of Europe. At the same time, there is also a gradual shift among entry-level (sub-US$100) smartphone users towards mid-tier (US$100-US$250) and high-tier (US$250-US$400) smartphones in 2018. In fact, more than half of the total smartphones sold across the world in 2018 came from the mid-tier and the high-tier price bands.

There are several reasons for this shift. A key reason is the maturing global smartphone user base. Many of them are buying their second or third smartphone. Aspirations are also increasing. Not everyone can afford a premium-tier flagship device but most smartphone users in mid-to-high-tier segments are demanding better specs, features, and performance. As a result, the feature sets and product quality offered by the upstart smartphone vendors such as Xiaomi, OPPO, Vivo, Huawei, Asus, Realme, and others are attracting entry-tier and mid-tier smartphone users to purchase their next phones in the US$100-US$400 price segment. Some of the most in-demand features in this price segment are as follows: –

Artificial Intelligence – On-Device AI for advanced imaging, computing, AR translation, scene detection, low-light enhancements, portrait modes, and more.
Imaging – Multiple and varied camera sensors from telephoto zoom to higher resolutions to ultra-wide support, hybrid auto-focus, and more.
Gaming – Optimizations for stunning realistic graphics rendering, faster frame rates, and immersive audio support to enhance the gaming experience.
Power – Advanced CPU optimization for efficient power consumption and better battery life, quick charging, and other such features.
Connectivity – Advanced LTE (600Mbps+ throughputs), WiFi (802.11ac), Bluetooth connectivity with optimized RF performance for better signal performance.

All these advanced features and technologies have trickled down to mid-to-high-tier segments because of chipset vendors like Qualcomm, Samsung, HiSilicon, and MediaTek. In this regard, Qualcomm has been ahead of the competition and has been swiftly able to democratize cutting edge features. It has helped upstart brands to compete with vertically integrated players such as Samsung and Huawei.

Qualcomm’s 4, 6 and 7 series platforms of System of Chipsets (SoCs) have driven this trend in these key price segments bringing innovations to masses. Together, these series powered more than 41% of smartphones in this segment (US$100-US$400) in 2018 according to our latest Global Soc Model Sales Tracker research.

Exhibit 1: Smartphone SoC Family Sales Share by Price Bands in 2018

Building on the success of 6 and 7 series, Qualcomm today announced new SoCs Snapdragon 665 and Snapdragon 730/730G for smartphones. Here’s a closer look at what these new SoCs have to offer: –

Qualcomm Snapdragon 665

The Qualcomm Snapdragon 665 is the latest generation 6 series SoC platform. It builds upon the 14nm based Snapdragon 660, which was launched 23 months ago. However, the 665 is significantly better than the 660.
The major upgrades are advanced AI, optimized gaming, and cutting-edge imaging capabilities. It brings in near-premium experiences for someone buying a first or second smartphone.
For the first time, Qualcomm brings its third-generation AI engine (AIE) to the affordable 6 series platforms.

Exhibit 2: Snapdragon 665 – 3^rd Gen AI Engine

It incorporates the powerful heterogeneous computing-based AI engine leveraging the latest Qualcomm Hexagon 686 DSP, Adreno 610 GPU and 11nm based Kyro 260 CPU
The Snapdragon 665 AIE promises 2x faster AI processing and 2x Hexagon Vector eXtensions compared to the Snapdragon 660 (14nm)
The AIE also unlocks newer AI driven capabilities such as 3D Face Unlock, object detection, single camera portrait mode and relighting, scene recognition, augmented reality-based text translation, and more.

Exhibit 3: Snapdragon 665 – Premium Imaging Experiences

The improved AI-powered Qualcomm Spectra 165 ISP also supports a triple camera configuration (telephoto, wide, and ultra-wide), 48 MP sensor, 4K video capture, Portrait Mode and HDR stills, Hybrid Autofocus, 5x Optical Zoom, Zero Shutter Lag, and a multitude of camera-centric features.
Gaming has been a key use-case followed by camera and communication. The Snapdragon 665 offers an enhanced gaming performance and is the first 6 series SoC to support Vulkan 1.1 graphics driver for smooth and realistic graphics as well as faster frame rates, all powered by the Adreno 610 visual processing sub-system.
However, the Snapdragon 665 continues to offer the same connectivity options in the form of LTE-Advanced (Cat 12 – 600Mbps 3x20MHz CA DL/ Cat 13 – 150 Mbps 2x20MHz CA) as the Snapdragon 660 targeting emerging markets.

Qualcomm Snapdragon 730/730G

The Qualcomm Snapdragon 730 platform is the latest generation of the 7 series SoC platform and it builds upon the 10nm based Snapdragon 710 which was launched 11 months ago.
Snapdragon 7 series is a new tier which is filling up a huge gap left between Snapdragon 6 and 8 series SoCs. The flagship 8 series-based devices will continue to be more expensive with the addition of technologies such as 5G and new form-factors such as the dual or foldable displays.

Exhibit 4: Snapdragon 730 – Major Upgrade from Imaging to AI to CPU

Snapdragon 730 is a significant upgrade compared to Snapdragon 710 and cements its position nicely in the high-to-premium tier.
Qualcomm has integrated its fourth generation AI Engine (AIE) into the 730, in tow with the first ever Hexagon Tensor Accelerator (HTA) (INT16, INT8, Mixed) for 7 series. It also has more floating point ALUs as well as dot product instructions support. This provides powerful AI experiences for the camera, gaming, and performance.
The AIE incorporates Qualcomm Hexagon 688 DSP, Adreno 618 GPU, and a highly efficient advanced 8nm based Kyro 470 CPU promising 2x faster AI processing than its predecessor.
The Snapdragon 730 sports AI + voice engine to enhance voice recognition accuracy and pick up even voices from far or even in a noisy environment.
It has the first Computer Vision based Image Signal Processor (CV-ISP) for 7 series. This was earlier featured in the 8 series platform.
The Spectra 350 features the CV-ISP, which supports advanced imaging features such as 4K HDR video in Portrait Mode allowing depth sensing at 60fps, Object Segmentation, Cinemagraph video, HD slo-mo videos @ 960fps, and almost 4x power savings.
The SoC also supports the new generation HEIF compression format which saves photo, video and CV data in almost half the size.

Exhibit 5: Snapdragon 730 – Premium Imaging Experiences

Qualcomm also announced for the first time a 7 series chipset variant, called 730G, specially designed for OEMs looking to target advanced smartphone gamers. It allows for a more powerful but affordable gaming smartphone.
With Snapdragon 730G, Qualcomm enhances the gaming experience for a 7 series phone in a couple of ways –
- The 8nm Kyro 470 drives extreme power efficiency by balancing workload across to performance and six efficiency cores for demanding gameplay, promising a 35% power saving compared to Snapdragon 710.
- The Adreno 618 GPU visual sub-system is powered with some of the “Elite Gaming” features trickling down from the Snapdragon 855 such as true HDR10 gaming, 25% faster graphics rendering, Wi-Fi latency manager, Jank reducer, anti-cheat extensions, and other gaming related optimizations.
- The sub-system also supports 4K HDR10 PQ and HLG Video Playback (10-bit color depth, Rec. 2020 color gamut)
In addition to the powerful graphics and AI engine, the Snapdragon 730/30G sports an X15 LTE-Advanced (Cat 15 – 800Mbps 3x20MHz CA DL/ Cat 13 – 150 Mbps 2x20MHz CA) modem with 4×4 MIMO and up to 256-QAM
Snapdragon 730 is also the first non-8 series platform to integrate Qualcomm Wi-Fi 6 (802.11ax)

Qualcomm has some great 6 and 7 series announcements which should help it maintain a wider lead in the sizeable mid-to high-tier market. The 6 series portfolio now spans from a cheaper Snapdragon 625 to 665 and the 675 offering multiple options for different OEMs to design and differentiate. The 7 series currently contributes a smaller volume. But with Snapdragon 730/730G, we should see more design wins in the US$300-US$500 wholesale price segment phones. As the premium Android flagship market median has shifted beyond the US$600 wholesale price, the 7 series is a great solution for this year’s affordable premium Android smartphones. Qualcomm’s focus on three core use-cases imaging, gaming, and AI should pay off as a sizeable maturing smartphone user base looking to upgrade and enjoy these enhanced experiences.

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