MediaTek Earnings Call: Q3 Revenue to Grow Up to 5%, Full-Year Revenue Expected at Upper End of Target

MediaTek (2454-TW) held its earnings call today (31st), benefiting from growth in its smart device platform business and the volume ramp-up of flagship smartphone chips. The company forecasts third-quarter revenue to range between NT$152.2 billion and NT$159.8 billion, flat to up 5% sequentially, and up 7% to 12% year-on-year. Full-year USD-denominated revenue is expected to grow in the high single-digit percentage range, reaching the upper end of its original target range.

Looking ahead to the third quarter, MediaTek forecasts revenue between NT$152.2 billion and NT$159.8 billion, assuming a USD/TWD exchange rate of 32. This represents flat to 5% sequential growth and 7% to 12% year-on-year growth. Gross margin is projected at 44.5% to 47.5%, with operating expense rate estimated at 29% to 33%.

MediaTek stated that growth in its smart device platform business is expected to offset the weakness in its mobile business, with gross margin anticipated to remain within the current range. Through disciplined pricing strategies, the company plans to appropriately pass through supply chain cost increases to product prices, expecting full-year gross margin to stay within the Q3 guidance range.

Regarding its smartphone product line, MediaTek maintains its view that global smartphone shipments will decline by approximately 15% year-on-year for the full year and observes that smartphone brands are currently focusing on two types of products: flagship models with differentiated user experiences and entry-level models catering to price-sensitive demand.

MediaTek plans to launch its 2-nanometer flagship smartphone system-on-chip (SoC) in the third quarter, targeting next-generation agentive Agentic AI smartphones. The new product is expected to deliver stronger AI computing capabilities within a more cost-effective architecture. As collaboration with global customers expands, MediaTek anticipates further increases in its flagship smartphone market share by 2027.

However, due to relatively weak demand for other smartphone products, MediaTek expects third-quarter mobile business revenue to be flat to down in the mid-single-digit percentage range compared to the second quarter. The volume ramp-up of flagship SoCs is expected to largely offset declines in other product lines.

The smart device platform will be MediaTek's primary growth driver in Q3. With multiple new communications and automotive projects entering mass production in the third quarter, smart device platform revenue is expected to grow in the mid-to-high single-digit percentage range quarter-on-quarter.

In the computing market, MediaTek announced a collaboration with NVIDIA (NVDA-US) at this year's COMPUTEX Taipei to launch RTX Spark, targeting Agentic AI applications and high-end graphics computing. Related Windows PC products are expected to launch during the year-end holiday season. The company views this collaboration as a key milestone in expanding its computing business and as validation of its high-performance CPU system integration capabilities.

Power management chip business accounted for 6% of MediaTek's revenue in Q2, with Q3 revenue expected to be roughly flat compared to Q2.

MediaTek noted that comprehensive supply chain cost increases have become an industry-wide phenomenon. The company is implementing necessary price adjustments to ensure rising costs are appropriately reflected in product pricing, thereby maintaining its existing gross margin.