MediaTek 2022 net profit hits high; Q1 sales forecast to fall over 6%

Despite overcoming a fourth-quarter slowdown to post record net profits in 2022, MediaTek Inc. has said it expects to see a 6-14 percent quarterly decline in sales due to weakening global demand.

At an investor conference Friday, MediaTek said it posted NT$118.14 billion (US$3.95 billion) in net profit last year, a 6 percent increase compared with 2021, as well as record high consolidated sales of NT$548.80 billion, an 11.2 percent year-over-year increase.

Meanwhile, the Taiwan smartphone IC designer said its gross margin last year — the difference between revenue and the cost of goods sold — also rose by 2.5 percentage points compared with 2021 to reach 49.4 percent.

According to the company, MediaTek’s earnings per share for 2022 stood at NT$74.59, compared with NT$70.56 seen in 2021.

MediaTek CEO Rick Tsai (???) said the growth in sales and net income in 2022 came after the company’s three major businesses — smartphone chips, smart device chips and power management ICs — increased for the fourth consecutive year.

Among these, Tsai said that revenue generated from MediaTek’s smartphone IC business saw a 10 percent year-over-year rise, with orders from Chinese vendors for use in flagship smartphones increasing sharply.

Tsai added that his company grasped a more than 20 percent share in the flagship smartphone IC market in China last year, compared with almost zero in 2021.

In the fourth quarter of last year, however, MediaTek felt the impact of inventory adjustments triggered by a slowing global economy and weakening end-user demand.

Q4 earnings

During the October-December period, MediaTek’s consolidated sales fell 23.9 percent from a quarter earlier to NT$108.19 billion, pushing down its net profit by 40.3 percent sequentially to NT$18.49 billion.

EPS stood at NT$11.66, compared with NT$19.54 seen in the third quarter, with the firm’s fourth-quarter gross margin moving lower by one percentage point to reach 48.3 percent.

Tsai said that as a result of adjustments, inventory levels among MediaTak’s clients had gradually returned to normal, adding it was possible the first quarter would be the slowest of 2023.

Under such circumstances, Tsai said, MediaTek is expected to post NT$93.0 billion to NT$101.7 billion in consolidated sales in the first quarter, down 6 percent to 14 percent from a quarter earlier, while its gross margin is expected to range between 46 percent and 49 percent in the current quarter.

He said with China easing COVID-19 controls to stimulate global demand, MediaTek’s operations are expected to improve in the second quarter.

Tsai’s predictions came after U.S.-based rival Qualcomm Inc., which released its fourth-quarter earnings on Thursday, said inventory adjustments in the global smartphone IC industry could continue into the first half of this year.

As a result, Qualcomm has forecast that its sales for the first quarter will fall at a pace of up to 8 percent from a quarter earlier.


While smartphone shipments will fall slightly in 2023, Tsai said he still expected a bright side, as the penetration rate of 5G phones will rise to 55 percent this year from about 50 percent a year earlier.

Tsai said MediaTek will continue to penetrate the global high-end smartphone market in 2023.

He said his company’s cooperation with U.K.-based smartphone company Bullitt Group has unveiled the world’s first satellite-to-mobile messaging smartphone.

The collaborative phone is the first device to use MediaTek’s 3GPP NTN (Non-Terrestrial Network) chipset and is set to begin contributing to the Taiwanese IC designer’s first-quarter sales.

As for the company’s cash dividend policy, Tsai said that MediaTek would continue to follow an 80-85 percent dividend payout ratio plus a special NT$16 cash dividend per share to distribute its dividends for the 2022 earnings.

Source: Focus Taiwan News Channel