MediaTek CEO Predicts Further Decline In Global Smartphone Shipments But Remains Optimistic About Second Half of 2023

Yesterday, MediaTek CEO Cai Lixing spoke at a press conference and mentioned that while the semiconductor industry has been impacted by customer inventory adjustments and weak demand, customer and channel inventories have been continuously declining. However, the demand for certain consumer electronic products, such as smartphones, is still lower than expected.

Regarding the smartphone market, Cai Lixing admitted that in Q1, due to weak demand in the terminal consumer market and more active inventory adjustments by customers, smartphone revenue decreased by 20%, accounting for 46% of total revenue. He predicts that global smartphone shipments will further decline to 1.1 billion units this year, while 5G penetration rates are expected to increase to 55%. MediaTek will continue to expand its market share in the high-end market.

Regarding MediaTek's progress in the high-end market, Cai Lixing said that several flagship models using the Dimensity 9200 and Dimensity 9000+ chips have been well-received in the market, and more models using the Dimensity 9200 series chips will be released this quarter, with the third-generation flagship chip set to be launched next quarter.

In response to the large-scale price war launched by Qualcomm, which has impacted the company's profits, Cai Lixing said that this type of price competition is mainly in the entry-level smartphone market and that a "race to the bottom" pricing strategy is not an effective strategy. It cannot effectively stimulate terminal demand nor significantly change market share. Therefore, MediaTek's consistent strategy is to achieve a balance between market share, revenue, and profitability, rather than focusing on price competition.

MediaTek CFO Gu Dawei further stated that while there is indeed price competition for certain models, the estimated gross margin range for Q2 shows relative stability, and they have confidence in maintaining gross margins between 46-49% for the whole year.

Cai Lixing mentioned that global smartphone shipments of approximately 1.1 billion units this year are a short-term market bottom, and he is optimistic that the smartphone industry will perform better in the second half of the year. High-end smartphone models are relatively stable, and flagship models will maintain their annual growth trend. He also pointed out that two major reasons for weak smartphone demand are longer replacement cycles and increased use of refurbished phones by consumers.