MediaTek Moderates Guidance; 1 Billion Smartphones Still in Reach by 2025, FVE Cut Modestly

We slightly shave our fair value estimate on MediaTek to TWD 1,760 from TWD 1,800, corresponding to 21 times 2023 P/E. Hence, we view MediaTek as substantially undervalued since it now trades at a 10-year low of 8.3 times 2023 P/E. We believe the market is overly worried about the near-term outlook for mobile phone sales to soften and current company guidance does not shift our view for one billion 5G smartphones to be shipped by 2025 from the 620 million we expect in 2022. Fears of Qualcomm taking significant market share in mobile systems-on-chip, or SoCs, appear overblown as well, as data from CINNO show MediaTek’s shipments fared better up to May.