MediaTek's Forecast: Q2 Revenue and Tariff Impact
Anticipated Decrease in Mobile Phone Demand According to MediaTek
In a recent announcement, MediaTek Inc, a prominent chip designer, revealed that its Q2 revenue could drop by as much as 4% compared to Q1, driven by a potential slowdown in the smartphone market. According to MediaTek's expectations, its Q2 revenue will range between NT$147.2 billion and NT$159.4 billion (approximately US$4.6 billion to US$4.98 billion).
The anticipated revenue decrease is due largely to softening demand for smartphones, which accounted for 56% of the company's Q1 revenue. The forecasted gross margins for Q2 are projected to be between 46% and 49%, compared to 48.1% in Q1.
MediaTek's CEO, Rick Tsai, allayed fears and mentioned that despite market uncertainties, there were no major changes in customer orders, attributing this in part to the long production cycle time. However, the company is cautious about the second half of the year due to its significant reliance on consumer electronics like TVs and home devices, which could be impacted by US trade and tariff policies. MediaTek opted not to declare its full-year growth projections due to these uncertainties.
Despite these concerns, MediaTek remains optimistic about the mid to long-term potential, especially in artificial intelligence (AI), where it aims to generate over US$1 billion in revenue from AI application-specific integrated circuit (ASIC) chips next year. The company has made progress in cooperation with Nvidia Corp in the AI ASIC development sphere.
Regarding enterprise ASIC, MediaTek expressed confidence in its ability to design customized AI accelerators based on its advanced technologies and intellectual properties. The company has already secured several design-ins and design-wins for its new ASIC business.
In the first quarter of 2022, MediaTek reported a net profit of NT$29.33 billion, marking a 7% decrease from the same period in the previous year but a 23.3% surge quarter-over-quarter (QoQ). The gross margin for Q1 dropped to 48.1%, compared to 52.4% one year earlier and 48.5% in the previous quarter.
Sources:1. Taiwan News2. TechNode3. Reuters4. Nikkei Asia5. Edwoman
- Despite MediaTek's Q2 revenue forecast showing a potential 4% decrease, CEO Rick Tsai remains optimistic about the mid to long-term potential, particularly in artificial intelligence (AI), aiming to generate over US$1 billion in revenue from AI application-specific integrated circuit (ASIC) chips next year.
- MediaTek's Q2 revenue decline is due in part to softening demand for smartphones, which accounted for 56% of the company's Q1 revenue, but the company expresses confidence in its ability to design customized AI accelerators for enterprise ASIC.
- As MediaTek's Q2 revenue projections reflect a cautious approach due to US trade and tariff policies' potential impact on consumer electronics like TVs and home devices, the company has secured several design-ins and design-wins for its new ASIC business, particularly in the development of AI ASIC with Nvidia Corp.
