Technology / Semiconductor / Internet Research

Nicolas Baratte

Equity Bottom-Up

<ul>
<li>3Q24 results are inline at the Operating level and 12% above Consensus at the Net Income level. 4Q guidance inline for revenues but 10% below Consensus at Operating level.</li>
<li>Smartphone revenues increased in 3Q24 on Premium AI-enabled chipset. However, 4Q revenue outlook is flat YoY and QoQ. The recovery period after the 2023 downturn seems to be ending.</li>
<li>The Mediatek conundrum is that the stock is expensive versus a slow 2025 outlook. Growth drivers exists but beyond 2025. <strong>In the short-term, the stock is unattractive</strong>.</li>
</ul>


3Q24 results are inline at the Operating level and 12% above Consensus at the Net Income level. 4Q guidance inline for revenues but 10% below Consensus at Operating level.
Smartphone revenues increased in 3Q24 on Premium AI-enabled chipset. However, 4Q revenue outlook is flat YoY and QoQ. The recovery period after the 2023 downturn seems to be ending.
The Mediatek conundrum is that the stock is expensive versus a slow 2025 outlook. Growth drivers exists but beyond 2025. In the short-term, the stock is unattractive.


Mediatek 3Q24 Inline, 4Q Guidance Slightly Weak, Flattish Revenue Outlook and the Stock Is Expensive

<ul>
<li>Smartphones units sold in 3Q24 increased by +4% YoY. That’s a slowdown from +7% YoY in 1H24.</li>
<li>Growth comes from low-price Emerging Markets demand. But the Premium segment sees increasing ASP with AI-enabled phones.  </li>
<li>Hence for Mediatek and Qualcomm, the investment thesis rests on increasing ASP as AI is propagating – not volume growth. MTK had a nice rally, time to take a breather. </li>
</ul>


Smartphones units sold in 3Q24 increased by +4% YoY. That’s a slowdown from +7% YoY in 1H24.
Growth comes from low-price Emerging Markets demand. But the Premium segment sees increasing ASP with AI-enabled phones.  
Hence for Mediatek and Qualcomm, the investment thesis rests on increasing ASP as AI is propagating – not volume growth. MTK had a nice rally, time to take a breather. 


Smartphone Growth Is Slowing Down to +4% YoY in 3Q. Mediatek Had a Good Rally, Time to Take a Break

Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Zero One

Founded in 2015, Zero One produces independent investment research and provides corporate finance advisory services with a focus on both listed and private technology companies. Founder Vincent Fernando has over 20 years of experience in US and Asia capital markets.

Independent Investment Research

<ul>
<li>We hosted a conference call with Elan Microelectronics management; We view the company as a Structural Long position for the AI PC upgrade cycle.</li>
<li>From the company's perspective, significant impact from AI PC demand will come but not until 4Q24E or 1H25E. However, supply chain excess inventory improved and prepping for upcycle.</li>
<li>An estimated 90% of AI PC models launched at CES 2024 use Elan's products in their design; Elan well positioned for the upcycle and entrenching its position. Maintain Structural Long.</li>
</ul>


We hosted a conference call with Elan Microelectronics management; We view the company as a Structural Long position for the AI PC upgrade cycle.
From the company's perspective, significant impact from AI PC demand will come but not until 4Q24E or 1H25E. However, supply chain excess inventory improved and prepping for upcycle.
An estimated 90% of AI PC models launched at CES 2024 use Elan's products in their design; Elan well positioned for the upcycle and entrenching its position. Maintain Structural Long.


TechChain Insights: Call with Elan Micro; AI PC Significant Uptake 4Q24/1H25; Supply Chain Preparing

<ul>
<li>Qualcomm's latest earnings came in at the high end of guidance with automotive revenue surging and mobile steady. We analyze QCOM results' key implications for Mediatek.</li>
<li>Qualcomm's 2024E global handset market volume guidance remained unchanged vs. last quarter; however we believe Mediatek may have taken some market share in CY1Q24.</li>
<li>Qualcomm confirmed Mediatek's view regarding high-end phone demand strength right now, with AI capabilities the likely driver. Combining QCOM + Mediatek color suggests an AI-driven handset upgrade cycle ahead.</li>
</ul>


Qualcomm's latest earnings came in at the high end of guidance with automotive revenue surging and mobile steady. We analyze QCOM results' key implications for Mediatek.
Qualcomm's 2024E global handset market volume guidance remained unchanged vs. last quarter; however we believe Mediatek may have taken some market share in CY1Q24.
Qualcomm confirmed Mediatek's view regarding high-end phone demand strength right now, with AI capabilities the likely driver. Combining QCOM + Mediatek color suggests an AI-driven handset upgrade cycle ahead.


Key Insights from Qualcomm's Latest Data; Mediatek Taking Market Share?

<ul>
<li>Mediatek Enjoying a Massive Rebound for its Mobile Phone Segment; Most Optimistic About High-End Smartphone Demand</li>
<li>New AI Data Center Growth Driver on the Horizon; Recent Investment in U.S. AI Server Chip Startup</li>
<li>Recent Share Price Dip is an Accumulation Opportunity; We Rate Mediatek as a Structural Long</li>
</ul>


Mediatek Enjoying a Massive Rebound for its Mobile Phone Segment; Most Optimistic About High-End Smartphone Demand
New AI Data Center Growth Driver on the Horizon; Recent Investment in U.S. AI Server Chip Startup
Recent Share Price Dip is an Accumulation Opportunity; We Rate Mediatek as a Structural Long


Mediatek Seeing Massive Rebound in Mobile; Major AI Data Center Driver on the Horizon

Taiwan

MediaTek Inc. is a fabless semiconductor company for wireless communications and digital multimedia solutions. The company provides SOC system solutions for wireless communications, high-definition TV, optical storage, DVD and Blu-ray products.

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Mediatek Inc (2454 TT)

Mediatek 3Q24 Inline, 4Q Guidance Slightly Weak, Flattish Revenue Outlook and the Stock Is Expensive

Since 4Q23, revenues have been fattish in NT$. YoY revenue growth is the result of the 2023 downturn. Our main concern regarding Mediatek is high...

Nicolas Baratte

Smartphone Growth Is Slowing Down to +4% YoY in 3Q. Mediatek Had a Good Rally, Time to Take a Break

Smartphone growth is slowing down but ASP are increasing for Mediatek with 5G AI-enabled phones. Mediatek has other drivers, AI chips and Auto GPU....

Nicolas Baratte

TechChain Insights: Call with Elan Micro; AI PC Significant Uptake 4Q24/1H25; Supply Chain Preparing

Elan Microelectronics is poised for growth in the AI PC upgrade cycle, with a strong position in the market and potential impact expected in late...

Vincent Fernando, CFA

Mediatek Seeing Massive Rebound in Mobile; Major AI Data Center Driver on the Horizon

Mediatek is enjoying strong growth in its mobile phone segment; with notable strength in high-end smartphones. The company could re-rate as its...

Vincent Fernando, CFA

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Mediatek 3Q24 Inline, 4Q Guidance Slightly Weak, Flattish Revenue Outlook and the Stock Is Expensive

Since 4Q23, revenues have been fattish in NT$. YoY revenue growth is the result of the 2023 downturn. Our main concern regarding Mediatek is high...

Nicolas Baratte

Smartphone Growth Is Slowing Down to +4% YoY in 3Q. Mediatek Had a Good Rally, Time to Take a Break

Smartphone growth is slowing down but ASP are increasing for Mediatek with 5G AI-enabled phones. Mediatek has other drivers, AI chips and Auto GPU....

Nicolas Baratte

TechChain Insights: Call with Elan Micro; AI PC Significant Uptake 4Q24/1H25; Supply Chain Preparing

​Elan Microelectronics is poised for growth in the AI PC upgrade cycle, with a strong position in the market and potential impact expected in late...

Vincent Fernando, CFA

Key Insights from Qualcomm's Latest Data; Mediatek Taking Market Share?

We deep dive into Qualcomm's latest results and the key take-aways relative to Mediatek. Overall, we find the latest QCOM results as positive for...

Vincent Fernando, CFA

Mediatek Seeing Massive Rebound in Mobile; Major AI Data Center Driver on the Horizon

​Mediatek is enjoying strong growth in its mobile phone segment; with notable strength in high-end smartphones. The company could re-rate as its...

Vincent Fernando, CFA

Elan Microelectronics is poised for growth in the AI PC upgrade cycle, with a strong position in the market and potential impact expected in late...

Mediatek is enjoying strong growth in its mobile phone segment; with notable strength in high-end smartphones. The company could re-rate as its...