MediaTek Earnings Call: Q2 Revenue Hits NT$152.2 Billion, EPS at NT$15.28! Q3 Revenue Target Up to NT$1,598 Billion

Despite weak smartphone demand, MediaTek achieved second-quarter results above its original outlook, as its smart device platform business captured over half of total revenue. Taiwan-based semiconductor giant MediaTek (2454) held an online earnings conference today (31st) to announce its Q2 consolidated revenue of NT$152.183 billion, a 2% increase quarter-on-quarter and a 1.2% year-on-year rise. This surpassed the initial forecast of NT$140.2 billion to NT$149.2 billion, resulting in earnings per share (EPS) of NT$15.28. Looking ahead to Q3, revenue is expected to range between NT$152.2 billion and NT$1,598 billion, representing flat to 5% growth quarter-on-quarter and 7% to 12% growth year-on-year. Full-year revenue in U.S. dollars is expected to achieve high single-digit percentage growth, reaching the upper end of the original annual target range.

Q2 Revenue Exceeds Guidance, H1 EPS Reaches NT$30.45

MediaTek CFO David Ku stated that Q2 consolidated revenue of NT$152.183 billion represented a 2% increase from Q1 and a 1.2% year-on-year rise, with an average exchange rate of USD 1 = NT$31.6. Revenue exceeded expectations primarily due to increased market share in the smart device platform business, offsetting the impact of declining smartphone demand.

Q2 gross margin was 46.2%, down 0.1 percentage points from the previous quarter and 2.9 percentage points from the same period last year. The larger year-on-year decline was mainly due to a one-time gain recognized in the prior-year period, which elevated the base for comparison.

MediaTek's Q2 operating expenses were NT$47.44 billion, higher than Q1's NT$46.165 billion and last year's NT$44.499 billion. Operating profit was NT$22.868 billion, down 0.1% quarter-on-quarter and 22.2% year-on-year, with an operating margin of 15%, down 0.3 and 4.5 percentage points from the previous quarter and the same period last year, respectively.

Q2 net profit after tax was NT$24.605 billion, up 0.9% quarter-on-quarter but down 12.3% year-on-year. Net profit attributable to owners of the parent company was NT$24.335 billion, up 0.7% quarter-on-quarter but down 12.6% year-on-year, with EPS at NT$15.28—higher than Q1's NT$15.17 but lower than last year's NT$17.50. Cumulative revenue for the first half of the year reached NT$301.334 billion, with net profit attributable to owners of the parent company at NT$48.489 billion and EPS reaching NT$30.45.

Smart Device Platform Share Rises to 53%, Surpassing Smartphones as Top Business

MediaTek's Q2 revenue mix showed a significant shift. The smartphone business, affected by rising smartphone bill-of-materials (BOM) costs and weakening end-market demand, saw revenue decline 14% quarter-on-quarter and 20% year-on-year, reducing its share of total revenue to 41%.

In contrast, the smart device platform business saw revenue grow 19% quarter-on-quarter and 26% year-on-year, increasing its share to 53%—surpassing smartphones as the largest revenue source in Q2. MediaTek Vice Chairman and CEO Ming-Kai Tsai stated that growth momentum came from continued market share gains in communications, computing, and automotive products, as well as contributions from increased DRAM value in TV chips.

The power management IC business recorded Q2 revenue growth of 11% quarter-on-quarter and 6% year-on-year, accounting for 6% of total revenue, primarily driven by increased market share in computing and data center applications.

Q3 Revenue Up to NT$1,598 Billion: Smart Devices Offset Smartphone Weakness

Looking ahead to Q3, MediaTek forecasts revenue between NT$152.2 billion and NT$1,598 billion, assuming an exchange rate of USD 1 = NT$32. This represents flat to 5% growth quarter-on-quarter and 7% to 12% growth year-on-year. Gross margin is expected at 46% ±1.5 percentage points, and operating expense ratio at 31% ±2 percentage points.

Among the three major businesses, flagship smartphone chip volume ramp-up is expected to offset weakness in other smartphone products, with smartphone business revenue projected to be flat to down in the mid-single digits quarter-on-quarter.

For the smart device platform, multiple new communications and automotive projects are entering mass production, so revenue is expected to grow in the mid-to-high single digits quarter-on-quarter. Power management IC revenue is expected to be roughly flat compared to Q2.

Tsai stated that growth in the smart device platform is expected to offset the impact of the smartphone business. MediaTek currently expects full-year revenue in U.S. dollars to achieve high single-digit percentage growth in 2026, reaching the upper end of its original annual target range.

Supply Chain Costs Rise Across the Board: Price Adjustments Aim to Maintain Margins

Facing rising costs across the supply chain—including wafers, packaging, and memory—MediaTek has begun implementing price adjustments to moderately reflect increased costs in product pricing. Ku emphasized that the purpose of MediaTek's price adjustments is to allow customers to share the cost pressures faced by the industry supply chain, not to increase gross margins through price hikes.

'We are not trying to increase gross margin through price adjustments; our goal is to maintain gross margin,' Ku said. Rising supply chain costs affect all products and process nodes, so costs will be reasonably reflected across different businesses, and the company will not rank which product lines have larger price increases.

For full-year gross margin, MediaTek aims to maintain it within the range of the Q3 outlook through its pricing strategy that reflects supply chain costs. As the smart device platform's share increases and data center business begins volume production in Q4, MediaTek's revenue structure is shifting from being smartphone-centric to a diversified portfolio supported by smartphones, computing, communications, automotive, and data centers.