The latest report released by the well-known analyst Ming-Chi Kuo stated that the US ban on Huawei will impact MediaTek and affect the development of its products. Coupled with China’s efforts to develop its own semiconductor chips, it cannot be ruled out that in the next 3 to 5 years, low-priced mobile phones of Chinese brands will adopt Chinese SoC. This has become a major challenge for MediaTek.
Ming-Chi Kuo pointed out that MediaTek’s 5G SoC gross profit margin may fall to 30% in 2021, mainly because of the rapid increase in the proportion of low-priced, low-margin Dimensity 720 and other shipments. In addition, MediaTek has no bargaining power with TSMC. There is no price advantage in competition. MediaTek’s 5G SoC ASP in 2020, 2021, and 2022 are predicted to be US$32~34, US$20~22, and US$14~16, respectively, which are lower than market expectations.
Guo Mingchi also said that the national policies of the United States and China are detrimental to the growth of MediaTek. The priority of US interests and China’s fourteenth Five-Year Plan may make it difficult for MediaTek’s future 5G SoC market share to grow.
Ming-Chi Kuo believes that MediaTek’s non-Huawei customer order demand is only 70% of Huawei’s. Because Qualcomm is still the main 5G SoC supplier for other Android brands, MediaTek’s product portfolio has changed significantly after the Huawei ban. MediaTek mainly ships low-priced mobile phones. The demand for high-end and mid-range 5G SoCs, including Dimensity 1000 series and Dimensity 800 will decline. Therefore, although the penetration rate of 5G mobile phones continues to increase, overall shipments continue to decline, which means that 5G has no significant contribution to the demand for mobile phone replacement.
In addition, Ming-Chi Kuo also pointed out that the localization of IC design is an important national semiconductor policy for China in the next 5 years. It is expected that in 3~5 years, low-priced mobile phones of mainland brands will begin to adopt domestic SoCs, and MediaTek’s mobile phone SoC market share will increase over time. Yan will encounter growth bottlenecks.
In addition, Ming-Chi Kuo pointed out that the localization of IC design will be an important national semiconductor policy in China in the next five years. It is expected that in 3~5 years, low-priced mobile phones of Chinese brands will begin to adopt Chinese SoCs. MediaTek’s mobile phone SoC market share will encounter growth bottlenecks in the long run.