MediaTek Remains Undervalued Despite Uncertain First Half. FVE Shaved to TWD 1,600

We cut fair value estimate for MediaTek to TWD 1,600 per share from TWD 1,760 after baking in more cautious assumptions on MediaTek’s 5G mobile chip market share and 2023 5G smartphone penetration. However, we still see MediaTek as undervalued since it has showed gross margin resilience in spite of weak smartphone volumes in the short term, and the outlook for nonsmartphone ventures such as automotive and enterprise market remain bright. We think China’s reopening and the introduction of cheaper foldable phones are drivers of 2023 and 2024 smartphone sales.