MediaTek Inc (聯發科), the world’s biggest supplier of 5G smartphone chips, yesterday reported its worst quarterly net income in about two years, due to customer inventory digestion and lackluster consumer spending in China.
Net income plummeted 40.4 percent sequentially and 38.6 percent annually to NT$18.51 billion (US$622.8 million) in the final quarter of last year, the Hsinchu-based chipmaker said. Last quarter’s earnings were the weakest since the fourth quarter of 2020.
For the full year, net income expanded 6 percent annually to NT$118.63 billion.
Photo: Vanessa Cho, Taipei Times
Demand has shown signs of stabilizing and business should pick up gradually from next quarter, MediaTek said.
Most of its customers have been cautiously managing inventories, which are approaching normal levels, it said, adding that some customers reported better-than-expected sales in China during the Lunar New Year holiday.
With the external environment improving, including China’s reopening after dropping strict COVID-19 restrictions, and a relatively stable global economy, “we believe demand visibility will gradually improve in the next few months and our business would start recovering from the second quarter of this year,” MediaTek CEO Rick Tsai (蔡力行) told a virtual investor conference yesterday.
“TV and Wi-Fi, for example, are seeing a mild demand pickup in the first quarter of 2023. Thus, the first quarter of 2023 is likely a low point for MediaTek,” he said.
To secure the company’s profitability, Tsai said MediaTek would continue to exercise “pricing discipline,” implying that the company would not engage in a price competition to spur demand for its chips.
Gross margin is forecast to fall to between 46 and 49 percent this quarter, versus 48.3 percent in the previous quarter, Tsai said, adding that it expects the ratio to remain at this level throughout the year.
Revenue this quarter is projected to shrink by 6 to 14 percent sequentially to between NT$93 billion and NT$101.7 billion, Tsai said.
That would be the first time MediaTek’s revenue falls below the NT$100 billion mark since the fourth quarter of 2020.
Smartphone chips, the biggest contributor to MediaTek’s revenue, fell 29 percent sequentially last quarter as customers scaled back orders due to inventory digestion.
Mobile phone chips accounted for 52 percent of the company’s total revenue last quarter.
MediaTek did not give a full-year forecast for revenue, saying it is still monitoring how soon and to what extent the global economy would recover over the next few months.
However, the chipmaker said it would continue to tap the world’s most cutting-edge production technologies, such as Taiwan Semiconductor Manufacturing Co’s (台積電) 3-nanometer process for its chips.
MediaTek expects global smartphone shipments to shrink slightly this year, but 5G smartphone penetration is forecast to climb to about 55 percent from 45 percent last year, bolstered by fast-growing demand from emerging markets like India.
Asked about the impact of Oppo Mobile Telecommunications Corp’s efforts to develop its own chips, Tsai said the company does not comment on customers’ activities, but it has “very strong relationships with our customers.”
After re-entering the flagship smartphone chip market, MediaTek last year captured more than 20 percent of China’s Android flagship market, from almost zero in 2021, it said.
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