MediaTek (2454 TT Equity)
Currently traded at: 105.30 TWD
Market Cap: 1260.5 billion TWD
P/E: 12.28
Est P/E: 17.62
Revenue Distribution:
Mobile Phone: 53.41%
Smart Edge Platforms: 39.33%
Power IC: 7.26%
Major clients:
Samsung(5.8%), Xiaomi(4.6%), Panasonic, HP, LG, Tencent, Asustek, Huawei(2%~3%)
Historical Analysis
2018
● Apr 6:
●
2019
● Feb 25: MediaTek rises as much as 6.8% to highest intraday level since last July,
as BoAML upgrades the chip designer to buy from neutral on "attractive"
valuation and bets 5G technology will benefit the company.
1)Leading operators and equipment makers including China Mobile and Nokia
have successfully tested co.’s Helio M70 5G chip
2)Estimates 13% mobile revenue growth for co. in 2020
3)Cites smartphone market improvement and expectation of 5G focus at the
upcoming World Mobile Congress
●
2020
● Mar 9: In order to reflect that the sales of MediaTek Dimensity 1000 5G chips
were affected by the Wuhan pneumonia epidemic, and that rival Qualcomm’s
S765 chips cut prices to defend their market share
● May 18: Huawei’s suppliers fall across the Greater China region after the U.S.
moved to prevent chipmakers using U.S. technology from supplying the firm.
● Jun 19: MediaTek shares reach a 10-year high Friday after Nomura hiked its
target 59% on anticipated big 5G business next year with Huawei.
1)Firm seen grabbing 60%-70% of Huawei’s 5G system-on-a-chip business next
year as MediaTek is unlikely to be blocked from selling to Huawei
● Jul 08: MediaTek rises as much as 9.1% to a record high, after Aletheia Capital
boosts its target price by 108% on higher earnings estimates and China market
share gain with big shipments to Huawei.
1)Co. is expected to seize about 50%-60% of 5G market in China in 2021
“without pierce ASP pressure,” and keep the momentum into 2022, when
Huawei runs out of inventory of its HiSilicon chips
Shipments to Huawei could top 100m units next year
● Aug 18: Shares of Huawei suppliers fall sharply in Taiwan after the U.S.
announces new curbs on the company’s access to semiconductors.
1)Latest steps unveiled by U.S. Commerce Department aim to further restrict
Huawei’s ability to acquire commercially available chips
2)MediaTek says development won’t have a material impact on near-term
operations
● Oct 12: MediaTek hits a fresh 2-month high after reporting sales increased 61%
y/y in September, with Morgan Stanley raising expectations while predicting the
firm will regain bargaining power in low-end 5G chips amid rival Qualcomm’s
limited capacity.
2021
● April 28 : Post-1Q Earnings Outlook: MediaTek may sustain its rapid sales
growth of more than 75% for at least one more quarter. That expansion is
fueled by quicker-than-expected expansion in market share for high-end 5G
Android smartphone chips and among Chinese phonemakers, while rival
Qualcomm wrestles with supply difficulties surrounding its premium
Snapdragon chips outsourced to Samsung. MediaTek's gross margin may also
expand to 46% on the expectation that 5G chipsets will comprise a larger share
of the sales mix compared with 4G chipsets.
● May 5 : Semiconductor-related stocks in Taiwan and Hong Kong fall after U.S.
Commerce Secretary Gina Raimondo called for a major increase in U.S. chip
production capacity to tackle shortages and wean off from over-dependence on
Taiwan and China.
1)In the shorter term, the Biden administration is in talks with Taiwan and TSMC
to prioritize the needs of American automakers
● Oct 14:Since September 29, MediaTek has been withdrawn by foreign capital in
large numbers. As of October 13, the band has sold more than 12,000 copies.
● Nov 18: Asian semiconductor-related stocks may move after Nvidia Corp., the
world’s largest chipmaker by market value, gave an upbeat forecast for the
fourth quarter, fueled by its expansion into data-center chips and other
markets.
2022
● March 29: Shares of some Chinese consumer-electronics suppliers slump
Tuesday after a report that Apple looks to cut production of entry-level
smartphones and orders for AirPod earphones this year, while Xiaomi pares
losses after denial of a local media report on investigations into its invested
firms.
1)Apple plans to reduce output of iPhone SEs by about 20% next quarter
because of signs that demand is being hurt by the war in Ukraine, while also
cutting orders for AirPods by more than 10 million units for 2022, according to a
Nikkei report citing unidentified people
● Apr 17: MediaTek falls as much as 7.2% after Goldman Sachs downgraded the
stock to sell and cut it price target, citing a deteriorating earnings outlook,
intensifying pricing competition and declining market share.
1)Cuts price target by 15% to NT$620, with a weak recovery in smartphone
demand weighing on earnings outlook
2)Slashes 2023-25E earnings estimates by 11-15%, as “the market has yet to
fully reflect the potential downside from a weaker market demand outlook,
pricing erosion starting 2H23, and the less favorable operating leverage as
revenue scales down,”
● Jul 6: BNY Mellon Emerging Markets Fund added Tong Hsing Electronic
Industries Ltd. to its investments and exited its position in IShares MSCI
Emerging Markets ETF in May, according to data analyzed by Bloomberg.
The fund's disclosed holdings fell 4.7% in value to $803.7 million. Julianne McHugh
manages the fund.
Highlights:Boosted Momo.com Inc.
· Reduced MediaTek Inc.
· Taiwan Semiconductor Manufacturing Co. was the biggest investment,
representing 8.9% of disclosed assets
2023
● Jun 19: MediaTek Inc. jumps as much as 5.5% in Taipei as a local report says
that the company will produce chips for Google’s AI servers.
1)MediaTek will make chips for Google’s new AI servers
2)The chips will use TSMC’s 5nm technology
3)MediaTek aims to begin mass-production by early 2024
●
Takeaway:
Stock price mainly moved by Shipment and ASP, there is an erosion of ASP in this
industry, whether the company can maintain and make improvement on ASP
depends on the progression of pixel migration and penetration of upgraded HCM.
Shipment amount is closely related to the smartphone product cycle, concerns on
smartphone demand rising affects the shipment outlook, mainly due to Huawei’s
restriction and COVID-19 outbreak.
Appendix:
FY 19 Gross Profit Distribution:
Gross Profit Distribution
60%
50%
40%
30%
20%
10%
0%
1H17 2H17 1H18 2H18 1H19 2H19 1H20
HLC HCM 3D sensing Vehical Lens
Others Spherical Other sets
Handset Lens: 31%
Dual cam module 25%
Triple cam: 18%
Vehicle lens: 12%
Revenue
Revenue (million)
25,000
20,000
15,000
10,000
5,000
-
1H17 2H17 1H18 2H18 1H19 2H19 1H20
Consuming Lens Camera Module 3D sensing
Vehical Lens Others Total Revenue
Shipment
Shipment (million)
900
800
700
600
500
400
300
200
100
-
1H17 2H17 1H18 2H18 1H19 2H19 1H20
HLC HCM 3D sensing Vehical Lens
ASP:
ASP
140
120
100
80
60
40
20
-
1H17 2H17 1H18 2H18 1H19 2H19 1H20
HLC HCM 3D sensing Vehical Lens
Penetration:
Single Cam Penetration Rate
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1H17 2H17 1H18 2H18 1H19 2H19 1H20
Samsung Huawei Oppo Vivo
Xiaomi Others Total
Dual Cam Penetration Rate
70%
60%
50%
40%
30%
20%
10%
0%
1H17 2H17 1H18 2H18 1H19 2H19 1H20
Huawei Oppo Vivo
Xiaomi Others Total
Triple Cam Penetration Rate
35%
30%
25%
20%
15%
10%
5%
0%
1H17 2H17 1H18 2H18 1H19 2H19 1H20
Huawei Oppo Vivo
Xiaomi Others Total
Peers:
Moving similarly as Largan Precision (3008 TT) and Genius Electronic Optical (3406
TT), subject to smartphone camera upgrade.
Valuationa
HSI Index
