For Taiwanese Smartphone Suppliers, End of Stock Clearing and Faster Innovation Boosts Outlook

We hold our fair value estimates on MediaTek and Win Semiconductors at TWD 1,400 and TWD 245, respectively, after tweaks to our 2023 and 2024 estimates. We view inventory clearance has ended at both companies, and they will benefit from new launches from smartphone manufacturers. Both stocks are attractive in our view, as smartphone recovery has just begun and 5G proliferation should resume after a year of pause. Artificial intelligence is another bonus if it accelerates innovation on smartphones and other devices that attract consumers to replace their gadgets more frequently. MediaTek's and Win Semi's minimal exposure to a softening automotive market makes them good diversification targets against auto-heavy names in our coverage like Infineon and NXP.