As we continuously tend to listen that the smartphone market entered a plunge from the first half of this year. Therefore mobile application processor (AP) market is also predicted to face a deterioration. Mega companies leading to the mobile AP market are also worried about that sluggish demand whereas the increase in inventory at customers will intensify from the fourth quarter as well. Also, the giants like Qualcomm, MediaTek, and other companies have conventional set their business speculations for mobile AP for the fourth quarter due to the downfall in the smartphone market.
A mobile application processor is a system semiconductor that contains a CPU, GPU, and memory on a single chip. Notably, Apple has its own mobile AP. While the two grand companies, Qualcomm and MediaTek lead the global market.
As per the market research firm Counterpoint Research, if considering the rank then MediaTek comes at first place and Qualcomm is second respectively. This ranking is regarding mobile AP market share in the second quarter. With 39% and Qualcomm at 29% respectively. While considering the revenue as a factor, Qualcomm contributes a 44% share and MediaTek had a 22% share respectively.
Although these are a few companies that performed relatively better in the mobile AP segment. Even during the downfall in the smartphone market. The same began in the first half of this year.
Top Player’s Business in the Third Quarter
Qualcomm’s third-quarter handset business unit reported revenue of $6.6 billion. It records an up of 6% and 40% year-on-year respectively. Additionally, South Korean giant, Samsung Electronics launched its fourth generation flagship Galaxy Z Fold 4· This results in an impact of supplying the Z Flip 4 with the latest flagship application processor, the Snapdragon 8+ Gen 1.
Whereas MediaTek’s revenue in the mobile segment in the third quarter was NT$78.2 billion. It records a decrease of 8% QoQ parallelly an increase of 7% YoY.
The Fourth Quarter Predicted to Face a Decline
The predicted problem is in the fourth quarter. Whereby Qualcomm and MediaTek forecast that the mobile AP market will be facing a decline by the end of this year.
In its third-quarter earnings call, Qualcomm said, “The near-term financial outlook is influenced by two challenges currently facing the semiconductor industry: sluggish demand and increased customer inventories.”
Whereas the on-demand side perspective, the decay of the macroeconomy and China’s ongoing COVID-19 lockdown will continue to reduce consumers purchasing sentiment for IT devices. In terms of inventory growth, it is quite understood that there is an increase in customer inventory of tentatively 8 to 10 weeks. While it will take certain few quarters for the inventory to take an actual shape. At the same time, Qualcomm forecasted that overall revenue in the coming fourth quarter (Q1 2023 based on Qualcomm’s fiscal year) will be 9.2 billion. And record a fall of 13% in regard to the third quarter (11.3 billion dollars).
In addition to this, MediaTek thinks that the impact of weak demand and increased customer inventories will be at its peak in the fourth quarter.
“All markets- smartphones, Wi-Fi, and TVs are experiencing the most severe downturn we’ve seen in a decade,” MediaTek CEO Tsai Lixing said on a conference call shortly after the recent earnings call, adding that “our customers are taking a very conservative stance on stocking.”
