MediaTek Reports Strong Fourth Quarter Performance Driven by Smartphone Demand Rebound

Taiwanese chip designer MediaTek has announced a notable resurgence in its sales and profit, marking its first year-on-year increases in five quarters, largely attributed to a rebound in smartphone-related demand.
MediaTek Dimensity 7050For the fourth quarter ending December, MediaTek reported consolidated net profit of 25.6 billion New Taiwan dollars ($820 million), showcasing a robust 38.8 percent surge compared to the corresponding period in the previous year. Concurrently, net sales experienced a substantial uptick of 19.7 percent, reaching NT$129.5 billion.

During an earnings call, MediaTek CEO Rick Tsai credited the impressive gains to “better-than-expected smartphone demand,” with mobile phones constituting 64 percent of total revenue in the fourth quarter, displaying a remarkable 53 percent quarter-over-quarter growth. The surge in demand was attributed to the 5G and 4G sectors and the successful ramp-up of their flagship System on a Chip (SoC) Dimensity 9300.

MediaTek claimed that its Dimensity 9300 achieved strong revenue growth exceeding $1 billion in 2023. The Dimensity 9300’s AI capabilities, ranked globally as number one by the independent ETH Zurich AI benchmark, have been integrated into smartphones from major brands such as Vivo, OPPO, and iQoo, enabling on-device generative AI features.

MediaTek has extended generative AI to the premium segment with Dimensity 8300 SoCs, providing a wider range of hardware platforms for industry development.

MediaTek, known for its strength in semiconductors used in telecommunication applications, counts Chinese smartphone giants Xiaomi and Oppo among its major clients. The company had faced challenges in the wake of China’s slowing smartphone market; however, the rebound in demand during the year-end shopping season has contributed significantly to its recent success.

Looking ahead to the first quarter of 2024, MediaTek anticipates sales growth of 27-35 percent year-on-year, projecting a range between NT$121.8 billion and NT$129.6 billion. Despite the conclusion of the peak shopping season, Tsai expressed confidence in a “more normalized inventory situation” compared to the previous year.

Notably, in 2023, MediaTek experienced its first declines in profit and sales in five years, with sales dropping 21 percent to NT$433.4 billion and net profit shrinking 34.8 percent to NT$76.9 billion. However, Tsai outlined the company’s proactive measures, including price discipline, inventory reduction, and strategic reallocation of resources, which have strengthened MediaTek’s position globally.

For 2024, while MediaTek foresees an increase in global smartphone shipments by a low-single digit percentage to 1.2 billion units, Tsai acknowledged significant geopolitical uncertainties, making it challenging to provide a specific forecast. The company also highlighted the role of generative AI in driving smartphone upgrade demand and expanding the market for flagship and high-end smartphones.

In the first quarter of 2024, MediaTek expects a slight sequential decline in mobile revenue following strong restocking demand in the previous quarter. The company also outlined expectations for improvement in demand for smart edge platforms, particularly in TV, tablet, and broadband connectivity, anticipating a flattish performance sequentially.

Baburajan Kizhakedath