MediaTek held its annual analyst day in Austin, Texas on April 27^th. The general theme of the event was the company’s positive stance on the future, despite steep year-over-year declines in its quarterly results and diversification of its portfolio as well as regional revenue. In fact, the company has had zero layoffs during the recent turbulent times within the semiconductor industry. The company is rapidly transferring resources to automotive and AI computing areas.

Here are the key takeaways from the summit:

Mobile

• According to Counterpoint data, MediaTek was the biggest smartphone SoC player in terms of volume in 2022. MediaTek had 34% share in smartphone AP/SoC shipments in 2022 followed by Qualcomm with 29% share. Like other providers, there were tough decisions made related to shortages and allocation decisions. The company takes pride in the fact that it left no individual customer without allocations, though some received less than asked for in 2022.
• There were elevated inventories of both chipsets and finished goods exiting 2022. However, there have been improvements. Counterpoint Research data shows that sell-through had a sluggish start in Q1 2023, which did not help the situation. The China market remain well under pre-COVID-19 volumes.
• The company believes it will gain smartphone SoC share in the US and Europe in 2023.
• This will help offset the weaker sell-out expected in 2023 vs 2022. Conforming to Counterpoint’s take on the smartphone market, MediaTek recorded weak smartphone demand during Q1 2023 as consumers remained cautious. Mobile revenue is expected to be flat QoQ in Q2 2023 with an improvement in H2 2023.
• Though global mmWave rollouts have decelerated, the company has a high performing mmWave solution. The company is not seeing any new regions ‘leaning into’ mmWave. And, even within fixed wireless access (FWA), sub-6 spectrum is the workhorse. Nevertheless, MediaTek is prepared if things change.
• MediaTek unveiled the 9200+ SoC. Key is the 5% – 12% performance boost. Built on 2^nd Gen TSMC 4nm plus optimized packaging, MediaTek expressed most OEMs will migrate to the 9200+ from the 9200 on future designs.
• MediaTek believes the Dimensity 9000 series will help increase its share in the premium segment. vivo was the first to use MediaTek’s SoC with its X90 smartphone. Other significant design wins include the new OPPO Find N2 Flip and the Techno PHANTOM V Fold, powered by the Dimensity 9200+. To gain share in new price tiers, it will take three to four generations or more before we see how disruptive MediaTek’s flagship series will be.
• MediaTek said that it is the leader in mobile hotspots and FWA hardware and has early satellite link hardware in the market.

Source: MediaTek

• There are many areas within the premium segment that have had significant spec improvements. Gaming continues to drive specs with ray tracing, better power management, frame rate management and improved thermals. MediaTek is bringing 4x carrier aggregation to the market. For regions with fragmented 5G spectrum (such as the US), this is important for mobile operators.
• As many regions are at the beginning of 5G rollouts, there likely will be an opportunity for growth at entry 5G. Except for some aging SoCs, pricing discipline has remained intact which is particularly important for MediaTek.
• Connected PC continues to be a challenging segment. Like other players in the ecosystem, MediaTek is not giving up. With improved performance and better mobile service terms, things could change in the medium term. The key advantages (multi-day battery life, superior security to public Wi-Fi, fast bootup) still need to be campaigned to consumers.

Automotive

          Source: MediaTek

• MediaTek confirmed that it never exited the automotive space, but rather deprioritized it. However, this has dramatically changed. The company recently announced new automotive solutions and we expect more design wins in 2023.
• The company forecasts that its automotive revenue will reach $200 million in 2023.
• MediaTek unveiled MediaTek Dimensity Auto:
  • Dimensity Auto Cockpit: Displays, 16 ISP cameras, theatre quality surround sound, 3nm advanced process
  • Dimensity Auto Connect: Wi-Fi, Bluetooth, 5G for supporting cockpit connection, multiple displays, hotspot support, 4x to 5x faster speeds than home gateways.
  • Dimensity Auto Components: MediaTek will supply many of the components that faced extreme shortages during the COVID-19 pandemic including power management ICs, display driver ICs and global navigation satellite systems.
  • Dimensity Auto Drive: ADAS solution with time-of-flight solutions, Wi-Fi, LiDAR, radar and 60GHz supported; this product will be manufactured with partner companies.
• China may have more potential in the short term, but Europe and the US are expected to announce significant design wins in 2023. Mainstream and entry telematics solutions within Tier 1 OEMs may be the early low-hanging fruit.
• MediaTek has engaged with both Tier 1 and OEMs directly. Customers will be able to pick a la carte or all platforms. Of course, the aim is to sell the entire platform. Auto Cockpit and Auto Connect will likely contribute to the bulk of revenues in 2023/24.
• MediaTek will partner with companies to supply ADAS solutions.

Broadband

• Within broadband, MediaTek doubled its revenue over the past 18 months. Key customers include T-Mobile, Verizon, DT and Telefonica. Within cloud and enterprise, key customers include Cisco and Aruba.
• The company believes Industrial IoT has a $2.5 billion addressable market. Contributing to this market includes low-end industrial tablets, POS terminals, factory automation solutions and smart city applications. North America and Europe are driving this space in 2023.
• Wi-Fi 7 will get certification this year with manufacturers quickly moving to sell the latest version. There will be a longer runway for Wi-Fi 7, probably four years, which is an improvement over the shorter lifespans for Wi-Fi 6 and Wi-Fi 6E.
• Many smartphone flagships and premium notebooks in 2023 will feature Wi-Fi 7.
• 5G CPE sales have taken off. Globally, Counterpoint Research estimates fixed wireless access (FWA) added around 25 million subscribers in 2022. FWA speeds are sufficient, service prices are competitive, and the setup is simple. MediaTek estimates that it has a 65% market share in the CPE hardware ecosystem.
• The company is seeing a pickup in the adoption of 5G Redcap (reduced capability) in 5G IoT, wearables and AR glasses. These use cases cannot support 4×4 (antenna configuration) but can work with one antenna. Speeds are higher than LTE Cat 4 with lower latency. In addition, they have ultra-low power consumption capabilities.

VR and metaverse

• MediaTek is very upbeat about the potential growth of its metaverse business. The company believes its metaverse total addressable market (TAM) will grow to over $100 billion in 2030 from about $1 billion in 2023. While this is more aggressive than Counterpoint Research estimates, it is no doubt a critical space.
• MediaTek’s chipset is designed into the Sony PlayStation VR2 headset. We were able to test the VR device and each generation has made leaps in improvement. However, more improvements are still needed in various aspects.

Source: Sony

Satellite and NTN

Satellite is a new and exciting space which MediaTek has emphasized on more than on mmWave opportunities. There are different implementations adopted by various providers. MediaTek is taking an open standards approach.

• Use cases include two-way messaging, location sharing, weather forecasting, push-to-talk service, and emergency SOS. Commercialization is expected in 2025 or 2026.
• Release 17 will be key with two types of NTN satellite communications, which will enable IoT NTN and NR NTN. It will move data transmission from KBPS to MBPS, which will add new use cases.

Source: MediaTek

Q1 2023 results and 2023 outlook

Source: MediaTek

• Like many within the semiconductor sector, year-over-year comparisons look dire. According to Counterpoint Research estimates, the smartphone market will see a comeback in H2 2023 with volumes growing 12.5% over H1 2023. MediaTek has a similar outlook.
• Mobile customers’ inventories are still elevated but the situation has improved. Sluggish mobile demand in Q1 2023 slowed the recovery. Meanwhile, some smartphone OEMs’ inventories are back to normal.
• TV, broadband products, and smart edge are seeing market share gains despite market weakness.
• From a small base, automotive will see gains in 2023. MediaTek believes $200 million in revenue is possible in 2023. Growth rates are uncertain as the design win cycle is so much longer in automotive than in mobile.

As 2023 global smartphone volumes will likely decline over 2022 volumes, MediaTek is striving for growth in other areas such as hardware within consumer/home/broadband, gaming/XR, connected PCs, AI and automotive.

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Open and Informative Executive Summit Event

MediaTek recently held its annual Executive Summit in Sonoma, California. The summit saw announcements on new products and detailed business updates, including on upcoming mobile, broadband, TV and metaverse products. CEO Rick Tsai and CFO David Ku were among the management officials who spoke on the occasion and fielded questions from analysts and media. Despite growing to become the fourth-largest fabless semiconductor company, MediaTek is often behind the scenes. Events like this have broadened the chipmaker’s brand recognition and understanding of its large range of business units. There are many businesses where MediaTek’s semiconductor solutions are positioned at the top or near the top:

• Smartphones
• Android tablets
• Arm-based Chromebooks
• Smart speakers
• Connectivity, broadband and networking
• Power management
• ASIC solutions
• Smart TV and digital TV
• Optical drive and BD players
• Feature phones
• Digital cameras
• Automotive connectivity and telematics

MediaTek’s 2026 revenue TAM is forecasted to grow to $780 billion. Business unit revenues will grow more diverse over the next four years.

Source: MediaTek

MediaTek has outperformed the tech industry over the past four years. The company’s revenues have doubled, and operating profits have grown 5.5x during the period. Its technology roadmap is strong and diverse. Here are the key announcements made during the event:

New smartphone flagship SoC – Dimensity 9200

• This is MediaTek’s second flagship SoC launch. The company has over 30 design wins to date with its first flagship SoC, which will likely grow to over 50 design wins.
• MediaTek’s new flagship SoC is based on TSMC’s enhanced 4nm process. It contains around 17 billion transistors, making it one of the most powerful mobile platforms.
• Its CPU architecture consists of 1x Cortex-X3 core up to 3.05GHz, 3x A715 performance cores @ 2.85GHz, and 4x A510 efficiency cores @ 1.8GHz. Single-core performance is claimed to increase speeds by 12% and multi-core performance by 10%. We look forward to sizable gains in testing on devices upon launch.
• The GPU is built on Arm’s latest Immortalis-G715 cores (MC11) and has hardware-based ray-tracing ability and support for MediaTek’s HyperEngine 6.0 game engine. There are also new algorithms introduced that use less power and keep device temperatures lower.
• Enhanced APU will enable 4K@30fps night video shooting with high clarity and can deliver more innovations paired with the Imagiq 890 ISP.
• Compared to the Dimensity 9000 (last year’s flagship), the APU and GPU represent the areas with the most significant performance improvements.
• It is the industry’s first Wi-Fi 7-ready mobile SoC. The SoC is built on a 6nm node process, which fosters big power consumption savings.
• It has the first integrated mmWave solution with a new ‘beam forming’ approach.  mmWave 5G is testing 2x faster than Sub-6 5G.
• New packaging techniques will help with temperature control. The company noted the new packaging techniques improved heat dissipation by 10%, equating to a delayed rise in temperature allowing for 4x longer use (or play) time.
• As with every new SoC launch, the true test will be when we are able to test devices in the market. Looking at the spec upgrades, these are sizeable upgrades and should help MediaTek chip away at share in the high end. This is especially true for the China market.
• AI/camera ISP improvements will be among the key selling points. Upgrades include a better understanding of the environment, which means the ISP will understand objects and backgrounds and will apply different color processing. There is support for a dual-stream AI shutter for better photos for shots with high amounts of movement. Great effort has been made to improve night shots, long exposure shots and high dynamic shots. We look forward to seeing how OEMs implement these upgrades.
• The SoC is already sampling with OEMs and smartphones will be in the market in Q1 2023. vivo will launch the first smartphone with the Dimensity 9200. vivo has designed the 9200 into its X90 series. Other OEMs committed to the new SoC include Xiaomi, OPPO, and ASUS.

Filogic T800 thin modem for applications outside of smartphones

• MediaTek announced a new 4nm 5G thin modem for applications such as always-connected PCs, M2M and industrial IoT.
• Supports SA and NSA Sub-6 and mmWave 5G networks.
• Supports download speeds of up to 7.9Gbps and upload speeds of up to 4.2Gbps.
• MediaTek is targeting the always-connected PC space. There will be up to 50 PC design wins of the T700 in 2023 and the second-generation thin modem T800 should build on these design wins.

Kompanio 520 and 528 chipsets for entry Chromebooks

• The Kompanio updates will bring new experiences to entry Chromebooks. They support full HD+, dual monitors, and smart TV connectivity.
• Key specs:
  • Arm Mali G52 MC2 2EE, LPDDR4x memory with a max frequency 3733MHz, eMMC 5.1 storage with a hardware command queue
  • Hi-Fi 5 DSP, 2560 x 1200 display support at 60Hz and 1920 x 1080 external monitor display support at 60Hz
  • 1920 x 1080 at 60fps video encoding
  • All-day battery life, energy efficient, and fan-less design
• According to MediaTek, the 528/520 are testing 15% faster multi-tasking and 20% faster GPU. The 520 is outperforming the Intel N4500.
• The chips support the latest Google security framework.
• MediaTek is increasing its go-to-market activities with more marketing within BestBuy/Amazon and pushing the space at education trade shows.
• Asus and Lenovo will have devices in the market early in 2023.

Pentonic 1000 chipset for flagship 4K 120Hz TVs

• MediaTek is the number one semi supplier to TV OEMs with over 60% global market share.
• Key specs of the Pentonic 1000:
  • Wi-Fi 6/6E support aiding cloud gaming
  • Supports ATSC 3.0, AV1, HEVC, VP9, AVS3 and designed for VVC (H.266)
  • Updated voice assistant features that allow consumers to connect smart TVs to other smart home devices
  • Supports Dolby Atmos immersive sound
• After an accelerated upgrade period during the COVID-19 pandemic, the TV industry is seeing a slowdown and higher-than-normal inventories. 8k will not be a driver for some time.
• Xbox and PS5 updates are driving demand for 4k 120Hz flagship TV sales. AI advancements are improving picture and audio quality for better TV and gaming experiences.
• Versatile video coding (VVC) will begin to be adopted within flagship televisions.
• Dolby Vision IQ with Precision Detail will improve the 4K streaming TV experience, cloud gaming and video conferencing by adjusting the on-screen picture depending on how bright the room is.
• TVs with the Pentonic 1000 will be seen in the market in Q1 2023 and showcased at CES.

MediaTek Designed Into Sony PlayStation VR2

• Sony will launch its next-generation VR headset early in 2023. Multiple sources have written there will be two million units available at launch.
• MediaTek will supply the SoC in the headset display. This is a great design win for MediaTek.
• MediaTek believes XR will grow from under $1 billion today to $100 billion by 2030.

Outlook

MediaTek has the right approach toward the premium smartphone segment with its second-generation solution. It will take patience, quality and investment, more so against the backdrop of China market weakness and the overall macroeconomic slowdown, to continue on the growth path. But having a diversified portfolio and new chipsets for its IoT portfolio, including thin modem solutions, 5G FWA, Wi-Fi 7, 4K TVs, connected PCs, XR and gaming ASICs, will help the company through this challenging period.

The automotive business segment is small but important. It is another vertical which will help the cause, but it will take some time. Double-digit growth from a very small base is possible. Today, automotive solutions include power ICs, telematics, smart cockpit and infotainment. Eventually, the company will move into higher ASP automotive solutions.

The post MediaTek Targets Diverse Technology Verticals With 4 New Chipsets appeared first on Counterpoint.

Highlights from the quarter:

• T-Mobile led the US market adding 854,000 phone subscribers. AT&T added the second most phone subscribers with 708,000. T-Mobile continues to win over customers with its competitive service plans and sticky ‘un-carrier’ moves. Some of the most important are free Netflix, Apple TV+, free airline wifi, special 55+ plans, and no taxes or extra fees.
• T-Mobile phone churn remained low at .88%. Service revenue increased 7% YoY.
• T-Mobile sold about 6.3 million smartphones within postpaid channels. Smartphones sold or leased was down about 14% due to lower upgrade rates.
• Prepaid added 105,000 subscribers and sold about 2 million smartphones. 155,000 subscribers moved from prepaid to postpaid service plans. Prepaid churn rose .3% QoQ to 2.88% but was flat YoY.
• T-Mobile sold 2 million mobile broadband and IoT devices, a 33% increase. Smartwatches and tablets fueled the growth.
• T-Mobile remains under indexed but has made significant growth within the business/enterprise segment. The company expects to grow its business market share from about 10% today to 20% by 2025. Business added record high customers during the quarter and revenues and grew 20%. Revenues have grown double digits for four consecutive quarters. T-Mobile is not the only carrier to see growth within the business segment. Verizon also added 197,000 business phone lines and revenues by about 2%. T-Mobile has gained some market share plus the business total available market has grown.
• T-Mobile added government agencies, schools and universities, and SMBs at record levels and has seen record low churn within these segments. Recent business account announcements include Boeing, Ford, Delta and Vinsmart.
• Like other carriers, T-Mobile has seen growth within IoT. T-Mobile has sensory based solutions, asset tracking, fleet solutions, and video surveillance solutions. With a ramped up sales force, it is attacking retail, logistics, smart cities and smart manufacturing.
• T-Mobile added 578,000 FWA subscribers during the quarter and now has over 2 million FWA subscribers. The new service is a nice complement to its smartphone business. The FWA subscriber base is spread about 50% in suburban areas, and about 25% each in urban and small town / rural areas. The carrier believes it has a runway to between 7 million and 8 million FWA subscribers by 2025. Counterpoint Research surveys have shown performance and feedback has been very positive. Median 5G download speeds are about 187Mbps and the vast majority of subscribers use less than 100 GB per month showing the service is very sustainable. There are also opportunities for FWA to be a back up service to fiber broadband.
• 5G network rollouts remain ahead of competitors. T-Mobile’s mid-band now covers over 250 million people.
  • During the recently ended Auction 108, T-Mobile added an additional 1 million POPs to its 2.5GHz mid-band spectrum.
  • It is likely T-Mobile will maintain its mid-band lead over the next 6 quarters. It is updating over 1000 towers per week.
  • The carrier completed decommissioning the Sprint network.
  • T-Mobile has Voice over NR (VoNR) live in several markets. T-Mobile claims to be leading VoNR on a global level.
• The negative of the quarter was the slight decrease (.3%) in postpaid average revenue per account and flat postpaid phone average revenue per user. However, the Magenta MAX service was the most popular during the quarter. Only 20% of the base is on the Magenta MAX service plan, so there is a nice runway available.
• During the quarter, T-Mobile announced its partnership with SpaceX. No services have been announced, but the carrier will use next gen satellite connectivity which T-Mobile subscribers will eventually be able to use in remote areas, mountains, and marine areas without cellular connectivity.
• Outlook: Despite macroeconomic headwinds, T-Mobile has raised guidance during each quarter of 2022. The carrier expects to add about 3.2 million phone subscribers and over 3 million postpaid connected devices in 2022. T-Mobile will likely continue to lead US carriers in FWA growth due to its 5G mid-band lead. Q4 will be very competitive with the new iPhone launch and the aggressive promotional season of Black Friday, Thanksgiving and Christmas. T-Mobile will likely battle AT&T for net addition lead during Q4.

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The second large story of the quarter was that Samsung and Qualcomm inked a licensing agreement through 2030 and the 6G era. Qualcomm will power future Galaxy devices with high-end Snapdragons within smartphones, PCs, tablets, and XR. Qualcomm’s percentage of Galaxy devices will likely continue to grow. Note that Qualcomm is currently designed into about 75% of the Galaxy S22 family. Qualcomm specifically highlighted that the same royalty terms are in place. This means it is highly likely other OEMs will agree to the same royalty terms upon renewal. Huge win for Qualcomm.

Source: Qualcomm Investor Relations

Other highlights from the quarter:

• The design wins within automotive continue. Its digital chassis solutions revenue pipeline increased to $19 billion, up $3 billion YoY. Its latest design win is CARIAD, Volkswagen Group’s software company. CARIAD will use Qualcomm’s system-on-chips (SoCs) to enable its assisted and automated driving functions up to Level 4. This solution delivers 700 TOPs (trillions of operations per second).
• IoT revenues grew 31% YoY driven by edge networking and industrial IoT with combined revenue growth of more than 40%. Qualcomm will profit from the growth of Windows on Snapdragon and ARM-based computing. There are over 225 enterprise companies, more than 100 ISVs, and over 15 channel partners supporting the Snapdragon compute platform. Price points and performance continue to expand the value proposition. Further edge networking, Wi-Fi 7, and the robotics platform will be a key segment for growth for IoT.
• Qualcomm recently announced a new wearables platform, which saw a large leap in specs. Briefly, it is built on a 4nm process, 50% lower power consumption, 2x performance, and 30% smaller size. This redesign will push more processing to the co-processor. The power upgrade vastly helps kids/senior watch space. 4nm & performance will enable new sensors and the high-end. This will vastly help the smartwatch space allowing for better tracking (think kids/seniors), better health monitoring, and new applications in development. It remains a hurdle that too often the smartwatch is on the charger and not collecting data on the wrist. Qualcomm’s solution will greatly help this. OEMs will be able to scale with two platform options. There are 25 design wins and growing.
• RFFE grew 9% on an annual basis and will be a key part of Qualcomm’s diversification strategy. A large share of the Qualcomm RFFE is driven by smartphones. As per Counterpoint’s Smartphone RFFE Revenue report, Qualcomm led the smartphone RFFE market with 23.5% in Q1 2022. Qualcomm has a complete modem-to-antenna solution for 5G thereby supplying the end-to-end needs of smartphone OEMs. In the coming years, RRFE growth will come from Auto and IoT. The current RFFE design pipeline for the automotive segment is around $900 million. Also, in IoT, there is an opportunity for next-generation Wi-Fi (Wi-Fi 7) and Bluetooth for RFFE modules. The ASP growth in RFFE content from mid-end to premium smartphones is less when compared to mid-end and premium smartphone chipsets.
• There were limited comments about Qualcomm’s move into open, virtualized 5G RAN. However, the company recently announced partnerships with Hewlett Packard offering a next-gen 5G virtual DU solution. Qualcomm’s differentiation is lower power requirements, which the company explains are 60% lower for operators. The move to open RAN will likely be a rolling change with potentially more of a shift during the 6G transition.
• Qualcomm guided Q3 2022 revenues in the range of $11 billion to $11.8 billion driven by the Auto and IoT segment in QCT. Considering the global macro-economic conditions and the slowdown in consumer product purchases, Qualcomm’s forecast for the handset has been reduced to mid-single digits. Qualcomm can mitigate revenue declines if the premium segment performs much better than the low and mid-tiers.

Revenue growth this quarter was driven by the handsets due to a higher premium mix, automotive was driven by the digital cockpit solution, and demand in edge networking and industrial IoT in the IoT segment. Looking at the second half of 2022, handsets may be affected by slowing consumer demand, similar to some applications in consumer IoT. But, automotive and IoT (industrial and edge) will continue to drive growth.

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• The good:
  • Fixed wireless access continues to scale: Verizon grew FWA new adds by 32%. The company now has over 700,000 FWA subscribers. Big potential here. First, revenues are 2x – 2.5x higher than smartphone revenues. Verizon can add its FWA offering to other services including mobile wireless, wireline, unified communication services, IoT capabilities, and security. Much of the subscriber growth is coming from the public sector where Verizon remains dominant and is tougher for competitors to attack. There are also considerable net adds coming from constructions sites, hospitality mobile applications (think food trucks and other mobile business’), and other mobile sites. This is an area difficult for incumbent cable broadband providers to compete with Verizon. Verizon’s goal of one million FWA business customers could be conservative once C-Band eclipses 250 million POPs.
  • 5G / C-Band continues to roll out despite inflation and other macroeconomic headwinds: Verizon has 135 million POPs covered by C-Band and this will grow to 175 million by year-end. Where C-Band has rolled out, data usage is up 233%. mmWave traffic is up 49% YoY. With a mobile base of high-end customers, this translates into larger unlimited service plan opportunities. 100MHz channels are being added and eventually Verizon will have the mid-band (C-Band) speed brags back.
  • Verizon is holding its B2B lead: Verizon owns about 45% of mobile B2B subscribers. Verizon transitioned its organization three years ago splitting business units and consumer units. This has allowed Verizon to cater to B2B needs which are different than consumers’ core needs. Verizon also holds a significant lead with 5G rollouts covering stadiums, concert halls, airports, and other dense urban areas. Private networking contracts continue to be added. One high profile example is Associated British Ports. Business spend, to date, remains strong. The need for secure, seamless connectivity is safe from some of the gloomy outlooks.
  • With its acquisition of Tracfone, Verizon has a hedge if the bottom 1/3 of the market gains during uncertain economic times: To date, this has not been the case. Prepaid to postpaid migration continues at record levels. However, if the economy does turn recessionary, Verizon now has a huge channel within the Tracfone brand and Walmart to help weather the storm.
  • Verizon continues to hold onto a significant premium smartphone base: Verizon continues to hold a dominant role in winning over premium subscribers and holding onto its premium base with its mix and match service offerings. In addition, postpaid phone churn remains extremely low at .81%. Counterpoint Research’s North America Channel Share Tracker shows Verizon channels sold 27% of the US market’s Samsung Galaxy 21 and Apple iPhone 13 variants during the quarter—a very good showing.
  • Verizon remains the most powerful smartphone buying force in the US market: It sold over eight million smartphones during the quarter. It is enticing the base to upgrade and stay on Verizon — 5.6% of the consumer postpaid base upgraded during the quarter. (For complete model level sales insights contact info@counterpointresearch.com.) Average revenue per account also climbed as the company did a nice job moving the base to higher data buckets.

Source: Verizon 

• The bad:
  • The consumer mobile space was weak: Verizon lost 215,000 high value consumer smartphone subscribers (note, Verizon added 227,000 business phone subscribers). By contrast, AT&T added over 813,000 phone subscribers (both business and consumer combined). Verizon raised prices which was one partial cause for the consumer weakness. However, AT&T was able to make small price increases and net additions were very strong. In addition to AT&T, Verizon is seeing competition on all fronts—the incumbent carriers, cable players who have added wireless services, and other low-end prepaid offerings. With increased inflation, the premium Verizon consumers pay was exposed. Verizon expected the inflationary costs could be partially pushed to consumers with price hikes and this was a miscalculation.
  • There is no cost-effective way to move Tracfone subscribers over to the Verizon network: As noted, Tracfone is a hedge if the economy continues to sour. There is a negative to the Tracfone purchase, too. Verizon is in a race to convert its Tracfone base over to the Verizon network from AT&T and T-Mobile. Many need new handsets. It will take 12 to 24 months to complete this migration and, thus far, churn has been considerable. The low-end needs scale to make sense and Verizon will want to woo over as many of these 23 million plus subscribers as possible.
•  The outlook:
  • Verizon cut its 2022 revenue guidance: Likely, the fierce competition will continue to pinch Verizon in 2022. The company will have to hold onto as many subscribers and play defense until its C-Band is fully or nearly fully deployed. Extending mmWave coverage will also help. Verizon will then potentially have some network speed and coverage advantages again. Shorter-term, FWA remains a significant bright spot.

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Dimensity 930

The Dimensity 930 SOC will drive additional features into mid-tier priced smartphones. Key callouts are its 2×6 configuration, upgraded CPU with next generation memory interfaces, upgraded camera support (64MP or optional 108MP support), and 5G plus 5G DSDS support. The next generation memory interface is a new memory technology and supply/availability will be improved (e.g. 2xLP5/2750MHz, 2xLP4x/2133MHz uFS3.1, 2-lane). Improved display technologies and an enhanced gaming experience will be attractive in mid-tier priced smartphones. The chip is built on the 6nm process node.

China will likely be the country driving significant share of volumes of the Dimensity 930. 5G sell through is already at about 80% with consumer awareness high. The Dimensity 930 will further help drive volumes within mid-tier priced smartphones.

MediaTek helio G99

The G99 is a LTE SOC with significant upgrades in performance. MediaTek is positioned to gain considerable 4G SOC market share. Many large volume countries and regions have limited or zero 5G rollouts (e.g. India). Other mature markets still have significant LTE volumes within the low price tiers (e.g. EU, NAM). This will be a significant LTE upgrade. First, switching to 6nm process from 12nm process node will yield significant power and performance gains. As important, foundry capacity within 6nm is larger so this will help with supply. Most major OEMs are expected to be announce G99 powered products to hit the market late in 2022 and into 2023. The bump in camera support (108MP) and high frame rates (120Hz) are notable performance increases which have trickled down from the premium tier.

Dimensity 1050

The largest announcement is MediaTek’s unveiling of the Dimensity 1050. It is MediaTek’s first SOC supporting mmWave. MediaTek has had the technology ready but has held off until more countries rolled out mmWave. Today, the bulk of mmWave-enabled smartphones are sold in the US and South Korea. This chip will allow the company to seek design wins within US’ mid and high-tiers which have unofficially required mmWave (especially Verizon, lesser extent AT&T). We expect most OEMs to utilize three mmWave modules. The size of the module is very close to modules which are in the market today. We will track performance once devices are in the market.

The device supports 3x carrier aggregation with ability to aggregate mmWave spectrum and sub6 spectrum. The chip supports Release 16 updates. Smartphones with the Dimensity 1050 are expected in the market in Q3 2022. We suspect point-of-sale pricing of smartphones with the SOC will begin at about $650.

The sell through slowdown in China, COVID-19 lockdowns and macroeconomic conditions will affect the global smartphone market through 2022. MediaTek has guided to flat smartphone revenues in 2022 and 5G penetration (660-680 million units) eclipsing 50%. Further, 5G penetration is expected to reach 70% in the next two years. The launch of these three SOCs, MediaTek strengthens its mid-end portfolio and will help global mobile operators drive 5G sell through. The Dimensity 1050, the first mmWave solution from MediaTek, allows the company to gain higher ASP design wins in the US market. The Dimensity 930 will allow OEM partners to bring more performance into the $100-$299 point-of-sale price segments. Since LTE SOCs will remain in tight supply through 2022, the G99, if supply is solid, could drive significant LTE market share gains. Handset OEMs will use the LTE SOC to launch devices with significant performance improvements in the high volume segment of under $100 point-of-sale. This is an important price band in all regions. These new designs will drive high-end specifications into lower price tiers. It will also add additional competition within the 5G handset landscape. We look forward to testing these Dimensity-powered as they hit the market.

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Key highlights from Apple’s March quarter

• iPhone sales were very solid despite the company noting there were some shortages due to mature node chips. The iPhone 13 family and new iPhone SE 2022 were both strong during the quarter.
• Regions:
  • The largest growth region was the Americas with 19% YoY revenue growth. All hardware and service categories contributed to the region’s growth.
  • Despite many headwinds and homegrown handset OEM competition, Apple grew 3% in China.
  • Apple stopped shipping to Russia in March, which cost it 1.5% of iPhone revenues. The European region as a whole grew 5%.
  • Japan declined 0.23% and Rest of Asia Pacific declined 7%. Dollar appreciation contributed to the declines.
• Product categories:
  • iPhone: Supply did not keep up with demand for iPhones. But the iPhone 13 family will go down as a strong release. The iPhone SE 2022 fills a niche and Apple will be able to cost-erode and run it for many quarters.
  • Mac: Revenues grew 15% to $10.4 billion and hit an all-time high in the March quarter. The performance and marketing of the homegrown M1 chip helped. The past seven quarters have been the best for Mac as Apple has gained share aided by B2B.
  • Wearables, home, accessories: Revenues grew 15%. An interesting highlight is that two-thirds of Apple Watch buyers were buying their first Apple Watch. Counterpoint’s Smartwatch Tracker also shows Apple dominant within the space. New health applications, HR and sleep monitoring, and battery life continue to improve.
  • iPad: iPad revenues fell 2%, mainly because of component shortages within common and mature nodes. The impressive note here is 50% of iPad buyers were new to iPad. Key segments of B2B, government and education will likely see growth as shortages ease.
  • Services: Revenues grew an impressive 17%. Each category and each geography registered growth. Apple called out its 240 awards within Apple TV Plus. The space is super-competitive with many big spenders — not all doing well. If the rumors of Apple moving to buy the NFL Sunday Ticket (rights to NFL games) are true, it would add a lot of stickiness, especially to the North American market. Paid subscribers registered strong growth. Even as iPhone volumes go flat, revenue growth via services is significant.
• Outlook:
  • Apple warned of component shortages lasting through 2022, which will likely cost the company $4 billion to $8 billion over the June quarter. Luckily for Apple, due to the stickiness of iOS and its services, a large percentage of this revenue will likely be “pushed” and not lost.
  • Final assembly factories are back up and running in China. However, it is unknown how long key cities in China will remain in the grip of COVID-19.
  • Inflation is a concern for all Apple competitors. Apple is slightly shielded from this as commentaries from Microsoft and Qualcomm highlight that the high-end market and B2B/government/education sectors remain solid.

Related Posts

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6. Global Smartphone Market Declined by 7% YoY Amidst Supply Constraints and Geopolitical Uncertainty in Q1 2022
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11. iPhone SE 5G, new iPad Air with M1 SoC, Mac Studio with M1 Ultra SoC & more announced at Apple Event

The post Apple’s Record Quarter Shadowed by Continued Shortages, Other Risks appeared first on Counterpoint.

Here are the key recent announcements:

• Snapdragon X70 5G modem-RF system: The updated modem has some firsts. It is built on 4nm process. It is the first modem to support 10 Gigabit 5G speeds. This is achieved by supporting 4x carrier aggregation within Sub6 channels. It will also support carrier aggregation on the uplink to speeds up to 3GB/second.

The X70 supports every global 5G band. It is also the first to have an integrated AI processor in the baseband which will optimize the Sub6 or mmWave link. The AI processor will help with dynamic antenna tuning, AI based tower optimization, network selector, and monitoring the channel state. At its most basic, the AI can project the best route for data transfer—especially important for mmWave which can see signal degradation with walls, leaves, or other objects.

There are currently many flagship smartphones launching with the with 8 Gen 1 application processor such as the Magic 4 HONOR, Samsung Galaxy S22 family, and others from Oppo, Motorola, Xiaomi, HONOR, and OnePlus. Virtually all of these devices also include a Qualcomm modem, which bodes well for X70 adoption.

• Expanding the Snapdragon compute enterprise ecosystem: There are now more than 225 enterprise companies, more than 100 ISVs, and over 15 channel partners supporting Snapdragon compute platform. The always-on-always-connected PC has seen disappointing sales to date. However, price points and performance continue to expand making the value proposition stronger—especially valuable with the addition of 5G.

At MWC, Lenovo announced the ThinkPad X13s, which is powered by the 8xc Gen 3 compute platform. Key selling points include: Thin, fanless, and under 1KG in weight. It supports over 28 hours of battery life. Connectivity includes 5G sub6, mmWave, and WiFi 6E. The speakers support intelligent noise suppression. Great hardware like this is needed to grow the ecosystem.

• Qualcomm is driving the evolution to open, virtualized 5G RAN. The company recently announced partnerships with Hewlett Packard offering next-gen 5G virtual DU solution. Qualcomm’s differentiation is lower power requirements, which the company explains is 60% lower for operators.

The company has also partnered with Mavenir and Rakuten supplying next-gen DUs and RUs with massive MIMO for open RAN 5G deployments. It is not exactly a new market for Qualcomm as it has in its roots network infrastructure as well as small cell expertise.

• Qualcomm also has solutions within 5G private networks. It announced a collaboration with Microsoft which offers end-to-end and pre-integrated 5G private network solutions for vertical-specific use cases. Qualcomm will offer a RAN automation platform and optimize the radio of the private network.

In an era which companies can mix and match network vendors, Qualcomm can help facilitate by taking validated and tested solutions directly to the customer. It will ease the work on partners and also decrease time-to-market.

• Qualcomm is a leading FWA (fixed wireless access) supplier. Fixed wireless access has been the single most important 5G application, to date, giving incremental revenues to network operators. Qualcomm has a suite of offerings for self-installed CPEs including standalone 5G mmWave support. Qualcomm has a lot of know-how with multiple generations of mmWave devices. Besides mmWave CPEs with self-install, there are options with a Sub6 anchor for dual connectivity.

Qualcomm has over 125 design wins announced or in development with 40 OEM partners. The latest partner announced is Fastweb in Italy.

• Qualcomm has a suite of solutions within its branded Snapdragon Sound platform. Many interesting specs – maybe the most interesting are its 3^rd generation adaptive noise cancellation, digital assistant support with a wake word or button press activation, and its ultra-low power supporting enhanced machine learning. Snapdragon Sound also supports high resolution 24-bit 96kHz audio.
• Snapdragon Connect platform supports the latest technologies within 5G, WiFi and Bluetooth. Its RF front-end solution supports ultraBAW and ultraSAW filter technology. This will help Qualcomm continue to offer a full solution suite to OEMs. All smartphone OEMs utilizing the Snapdragon 8 Gen 1 application processor have incorporated Qualcomm’s RF front-end design.

Qualcomm has over 500 design wins within WiFi 6 and WiFi 6E. It recently announced FastConnect 7800, its first WiFi 7 system. Peak speeds are expected to support 5.8Gbps. The key new specs will be its improved low latency of two milliseconds and high-band multi-link support. Sampling begins during the second half 2022.

• Automotive announcements have accelerated. Qualcomm automotive revenues have eclipsed $250 million per quarter. It has led the digital cockpit and infotainment space partnering recently with Alps Alpine. These solutions include safety, comfort and entertainment solutions like e-mirrors, next-gen input/output devices integrated into door trims, ceiling display(s) and sound zones that project sound individually to each car occupant. The newer and larger story is Qualcomm’s entrance into ADAS (advanced driver assistance systems). Qualcomm made a large acquisition of Arriver (which is wholly owned by Veoneer). This acquisition recently closed. It will partner to deploy deep-learning algorithms for vision perception with a full suite of full-vision functions, among other innovations, combining Arriver’s next-gen ‘Vision Perception’ software with Qualcomm’s Snapdragon Ride Vision System. During CES, Renault announced it had chosen Qualcomm for the entire suite. GM and BMW are also in the ADAS pipeline. Qualcomm dropped a stat of the potential of up to $30 of 5G RF content revenues per vehicle.

At MWC, Qualcomm unveiled a new Snapdragon Digital Chassis Connected Car Technologies to accelerate and form the future of the automotive space. Most recently, BMW Group and Arriver formed a long-term joint development of automated driving software solutions within NCAP, level 2 and level 3 autonomous driving. We are expecting more automotive OEM announcements during the spring.

• More XR announcements with key Chinese partners. The most recent announcement is a partnership with ByteDance. Qualcomm announced its partnership with ByteDance (a TikTok parent company). The partnership’s goal will be to develop XR technologies and use cases, develop hardware equipment, software platforms, and developer tools. ByteDance has made its presence stronger in the XR field by acquiring Pico, a Chinese VR headset manufacturer last year. After this partnership, Pico XR products will be powered by the Qualcomm Snapdragon platform. This will expand Qualcomm’s business in computing and metaverse-related products.

Augmented reality glasses will be a large opportunity for the smartphone industry. Qualcomm has taken this step to be a pioneer in the XR field. The company already had one major partner in Meta, which works with on the Oculus. With an XR platform, Qualcomm will be looking to partner with numerous new companies.

• Qualcomm invests $100 million in the Snapdragon Metaverse Fund. Qualcomm has established a $100 million fund that will be used to back developers and companies building XR experiences as well as associated AR and AI technologies. As a chipmaker, Qualcomm will benefit if any end device uses it chips and helping the ecosystem grow is an aggressive move by Qualcomm.
• Qualcomm has announced industrial IoT and enterprise / retail solutions. Qualcomm has expanded it IoT portfolio with advances within smart grid and smart meters. The solutions are more reliable and easier to maintain with some ‘self-healing’ flexibility. Newest collaboration partners include Gridspertise and Rexroth. Rexroth, a Bosch company, collaboration focus’ on new mission-critical use cases enabled by 3GPP Release 16. Release 16 radio enhancements include access to unlicensed spectrum, new power savings, increased GPS precision for URLLC, carrier aggregation enhancements, and better NB-IoT compatibility. Within retail, Qualcomm has solutions which will enable digital payments, signage, and other retail enhancements.
• Qualcomm has partnered with T-Mobile supplying the US’ #2 carrier with its Snapdragon Spaces XR development platform. The goal of this partnership is to drive new 5G use cases. The development platform will help developers with positional tracking, image recognition and tracking, plane detection, spatial mapping and meshing, and scene understanding (floors, walls, ceilings and other physical space). Developers focusing on areas such as metaverse, cloud gaming, 8k streaming, edge cloud and crowded network optimization applications will find it extremely useful. It is important to have Qualcomm involved early to assist application developers.

Any questions on these diverse verticals, contact info@counterpointresearch.com

The post Qualcomm Announcements Keep Coming appeared first on Counterpoint.

• There are new 5G applications en route. More immediately, aggressive 5G rollouts are needed to simply keep up with data usage increases. 50% of T-Mobile’s data traffic is now over its 5G network. Since the 5G network launch, streaming and video data usage is up twofold, gaming is up fivefold and hotspot data usage is up threefold.
  • T-Mobile has over 646,000 FWA (fixed wireless access) subscribers covering over 15 million homes.
  • In the US, FWA net additions are higher than fiber broadband net additions. But the full potential of FWA is yet to be unleashed as all of the 5G mid-band spectrum has not been lit up. mmWave rollouts also continue. T-Mobile has many options – inner city, suburbs and rural areas – where FWA services would be welcome.
• T-Mobile announced its ‘T-Mobile DevEdge’ program. The goal is to lower the costs for application developers. By lowering costs and speeding time-to-market, T-Mobile will be able to offer more 5G services. Available to application developers today are:
  • New, state-of-the-art innovation lab in Bellevue, Washington. App developers will be able to work side by side T-Mobile engineers.
  • Pre-certified chipsets, modules and devices. This early access for testing will help reduce time-to-market.
  • Streamlined IoT certifications. In the past, it had taken over a year to certify an IoT device. Developers can now work earlier with T-Mobile engineers and work within a roadmap of IoT certifications.
  • Access to APIs. Developers can get direct access to T-Mobile’s network and developer kits at limited to zero costs. This will help applications take advantage of edge compute, network slicing, and IoT connections.
  • T-Mobile is especially excited about smart factory, robotics, drones and AR/VR/Hologram developments. Some of the AR/VR applications T-Mobile hopes to incubate include education and training use cases (think ability to ‘virtually’ see a manual or complete engine block while repairing an item in the field).
• New partners announced:
  • T-Mobile and Qualcomm have partnered to focus on Qualcomm’s Snapdragon Spaces XR development platform. This will help developers with positional tracking, image recognition and tracking, plane detection, spatial mapping and meshing, and scene understanding (floors, walls, ceilings and other physical space). Developers focusing on areas such as metaverse, cloud gaming, 8k streaming, edge cloud and crowded network optimization applications will find it useful. It is important to have Qualcomm involved early to assist application developers.
  • Qualcomm is a key partner for “5G Forward” for many reasons. It has close partnerships with Meta and Microsoft, two major players in AR/VR/Metaverse. In addition, it has created a $100-million Metaverse fund for XR developers.
  • Disney StudioLAB has partnered with T-Mobile stating it understands that there will be radical changes in how subscribers consume or watch media. It is a five-year partnership working on new, immersive experiences consumers could consume over T-Mobile’s 5G network, like ‘virtual presence’, mixed reality entertainment. The partnership does not just cover new experiences for consumers, it will also help Disney StudioLAB produce content. The media creator will be able to virtually scout remote movie locations or transfer video content in real time from remote locations over T-Mobile’s 5G network.
  • Red Bull-T-Mobile collaboration is expanding. Red Bull will be using T-Mobile’s 5G network during outdoor sporting events where it will be using drones to broadcast events. Red Bull will also be tracking competitor heart rate, acceleration, and position on course to make events more consumer-friendly to watch at home.
• Venture funding increases: T-Mobile is investing in early and emerging growth companies. It has also made investments in two key companies. SignalWire, a software-defined telecom apps company, is the first company T-Mobile has invested in. It specializes in communication APIs. The second company is Spectro Cloud, a cloud infrastructure company. T-Mobile Ventures has participated in Spectro Cloud’s $40-million Series B funding round. This investment focuses on removing barriers in implementing cloud infrastructure.

T-Mobile has a window where it is leading US operators in 5G rollouts. It plans to exploit this lead by investing and rolling out new 5G applications as fast as possible. Strong move and it will be interesting to watch what AT&T, Verizon, US Cellular and DISH bring.

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The post T-Mobile Investing to Pull in 5G Applications appeared first on Counterpoint.

Apple just announced its new iPhone SE smartphone at its online Peek Performance event. The new device will be more expensive than its predecessor but comes with a more powerful A15 Bionic processer and 5G network support.

Despite the bigger $429 price tag, the updated iPhone SE is expected to do well, with 5G network support now bringing it in-line with key competitors across the mid-end segment.

According to Counterpoint Research’s Smartphone Model Share Tracker, Q4 2021, the 4G iPhone SE 2020 accounted for 12% of Apple’s total iPhone unit sales from its launch in Q2 2020 to Q4 2021 – with Japan and US the biggest markets for the device globally.

“The iPhone SE has been a solid mid-segment performer for Apple, with the 2020 version accounting for 13% of overall sales during its launch year in 2020,” states Jeff Fieldhack, research director of Counterpoint’s US practice. “It’s continued to have fantastic longevity with the device appealing to both new iOS users looking to upgrade from budget Android or iPhone owners replacing iPhone 8 (or older) devices, which this new SE body is based around.”

Sujeong Lim, senior analyst, Smartphones, highlights the importance of key regional markets to the success of the new 5G enabled device, noting, “Developed markets like Japan will be critical to the success of the new iPhone SE, where one-third of all 2020 SE models have been sold – and, of course, stalwarts like the US and China which accounted for another third of unit sales will be big drivers.”

“But this time, we expect demand to open up more across other markets like Europe, SE Asia and Korea – regions where many consumers stayed away because of the lack of 5G support.”

“The pricing is a slight surprise to the upside, but it shouldn’t be considering the chip upgrades coupled with recent events only intensify short-term supply chain risks,” observes senior analyst Ivan Lam.  “I think they had room to move, especially with supply issues hitting lower-end components like 4G chipsets much harder than 5G, but this is a solid device with a long runway.”

Jeff Fieldhack notes, “The A15 Bionic supports all current services and others to come for the foreseeable future, so they can run this device for years with only slight tweaks or upgrades. And the higher starting price doesn’t just mitigate short term risk, it gives them extra padding to drop prices tactically in tandem with new 5G launches and as the product ages.” 

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst contacts:

Jeff Fieldhack

Follow Counterpoint Research
press(at)counterpointresearch.com       

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The post New iPhone SE 5G to Open Up More Mid-End Segments Across Key Regions appeared first on Counterpoint.

Quarter highlights:

• Handsets saw revenues of $6 billion and a 60% YoY growth for Snapdragon chipsets within Android. Qualcomm is clearly showing it is not reliant on Apple. The shift to 5G in China, NAM and EU has helped. Additionally, Huawei volumes are now split between some of Qualcomm’s premium customers such as Honor, Xiaomi, OPPO and vivo. This quarter, flagships will begin hitting the market with Qualcomm’s Snapdragon 8 Gen 1 flagship mobile platform. The next Samsung Galaxy flagship will be announced in the coming week. Qualcomm has nailed the launch periods of its flagship Snapdragon chipsets to hit Chinese New Year and the year-end holiday season with refreshes.
• RF front-end revenues were $1.1 billion, up 25% YoY. New designs with ultraBAW tech will be launched in the market. At its most basic, it is a new technology for above 3GHz which has improved power amplifiers and better envelope tracking, helping efficiency. This work is difficult and costly. OEMs are able to take this solution and improve both performance and time-to-market. Virtually all OEMs using the Snapdragon 8 Gen 1 also design in Qualcomm’s RF front-end.
• Automotive revenues were $256 million, small relative to the handset business but grew 21% and are ripe with opportunity. Qualcomm has been leading the digital cockpit and infotainment space partnering with Alps Alpine. These solutions include safety, comfort and entertainment solutions like e-mirrors, next-gen input/output devices integrated into door trims, ceiling display(s) and sound zones that project sound individually to each car occupant. The newer and larger story is Qualcomm’s entrance into ADAS (advanced driver assistance systems). Qualcomm made a large (pending) acquisition of Arriver (which is wholly owned by Veoneer) and will partner to deploy deep-learning algorithms for vision perception with a full suite of full-vision functions, among other innovations, combining Arriver’s next-gen ‘Vision Perception’ software with Qualcomm’s Snapdragon Ride Vision System. During CES, Renault announced it had chosen Qualcomm for the entire suite. GM and BMW are also in the ADAS pipeline. Qualcomm dropped a stat of the potential of up to $30 of 5G RF content revenues per vehicle.
• IoT revenues were $1.5 billion and consumer, edge networking and industrial verticals all saw 30% or higher growth. The opportunities here include the convergence of mobile with new FWA (fixed wireless access) solutions. Verizon and T-Mobile alone have secured over 800,000 FWA subscribers. Qualcomm is aggressively spending to diversify into the IoT space. Robotics saw a 50% increase in launches and design wins include the Amazon Astro. Qualcomm is also investing in solutions for retail IoT (think digital customer loyalty cards, gesture displays, digitized shelves, biometric payments and smart parking). Qualcomm continues to chip away at the PC space. Windows on Snapdragon always-on-always-connected devices have seen slow adoption. But there are now many more OEMs coming into the space as people adapt to remote work and learning. Qualcomm’s acquisition of NUVIA, a CPU and design company, is a large investment in creating breakthrough PC experiences. VR, AR and the metaverse are still being defined. However, when this becomes meaningful and tangible, Qualcomm is supplying two of the major front-runners with the deepest pockets — Meta and Microsoft.

• Qualcomm is confident that shortages will improve through 2022. Qualcomm’s supply has not met demand, but the situation is improving. To help, Qualcomm has increased its chip supplies by dual-sourcing from its key high-end foundry partners Samsung Foundry and TSMC.
• Outlook is strong: The company is guiding to $10.2 billion – $11 billion in revenues. QCT guidance is $8.7 billion – $9.3 billion. There may be a slight tailwind of improving component supplies, lessening business risks due to the COVID-19 pandemic, and multiple handset OEMs launching products with 5G Snapdragons.
• Like many companies, Qualcomm is adding in a ‘Corporate Responsibility Report’ to detail what it is doing to integrate sustainability, respect for human rights, and products that are purposeful and enable life-changing experiences. Some 2025 goals:
  • Reduce absolute Scope 1 and 2 GHG emissions by 50% by 2030. Reach net-zero global GHG emissions for Scopes 1, 2 and 3 by 2040.
  • Reduce power consumption by 10% in Snapdragon Mobile Platform products (given equivalent features).
  • Increase representation of women and underrepresented minorities in leadership roles by 15%.

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The post Despite Global Component Shortages, Qualcomm Dec Quarter Revenues Hit New High of $10.7 Billion appeared first on Counterpoint.

Details of the quarter:

iPhone: iPhone 13 had a great opening full quarter — a record $71.6 billion in revenues, which was 9% growth over Q4 2020. Additionally, iPhones were supply constrained but less supply constrained than most of its competitors. Apple does an admirable job locking in components by using many customized parts and locking in volumes early — even if it means additional upfront costs. In addition, with large volumes and limited SKUs, it has massive scale to be suppliers’ #1 customer. Apple has even invested in R&D support for some suppliers.

In multiple countries, the iPhone 13 Pro Max was the top seller, bumping Apple ASPs and overall revenues. The elongating life cycles are now baked into Apple sales. There is less of a large year followed by a weaker year. The iPhone holding period has grown — over three years in most regions and almost four years in some regions. This means a more regular upgrade since there is always a substantial part of the base holding an aged iPhone ready to be upgraded.

Apple will likely see good sales longevity of the iPhone 13 family. It will continue to heavily market its camera functionality (for example, Cinematic mode), battery performance, and durability. This will help justify the iPhone’s higher cost relative to most of its Chinese competitors.

Mac: Mac saw the largest percentage growth among Apple business units, growing 25% YoY in Q4 2021. Mac revenues rode the wave of increased PC purchases during COVID-19. Second, its in-house designed M1 chips are now powering the latest Macs and have impressive performance metrics. Finally, Apple has gained PC market share within education and business verticals.

iPad: iPad was the single business unit which saw revenues decline. Revenues declined 14% YoY in Q4 2021. Main reason for the decline was component shortages. Common components between the iPad and iPhone were prioritized for iPhones. Supply constraints for iPad were worse in Q4 than Q3. Pent-up demand within education and business will likely help sales in Q1 and Q2 as component shortages ease.

Apple Watch: Apple Watch and AirPods make up the vast majority of revenues which are lumped into ‘Wearables, Home and Accessories’. The category grew 13% YoY in Q4. Apple Watch continues to gain momentum. Apple Watch will likely continue to see revenue growth as the health and fitness utility continues to improve. Health coach, sleep analysis and heart rate analysis during exercise continue to improve. Apple continues to successfully market health and safety features, such as fall detection and the ECG feature for early detection of irregular heart rhythms.

Services: Apple services hit new highs in Q4 2021, growing 24%. There are over 785 million active service users. Music, video and the app store registered all-time revenue highs. Apple continues to see very low churn to Android and receives very high satisfaction ratings for all of its hardware. The active installed base of Apple devices has eclipsed 1.8 billion – this is a great flywheel for growth within services.

Apple Fitness+ is a unique service. Combined with Apple Watch, it has some interesting synergies for tracking health improvements. With its $203 billion in cash, there are other accompanying fitness hardware companies it could purchase (think Peleton) or develop on its own to increase the utility of Apple Fitness+.

Regions: Apple’s installed base of devices grew in every region. Two years ago, China was a huge problem due to its slowing economy and US-China trade tensions. In Q4 2021, China witnessed 21% growth, highest among all regions. Rest of Asia Pacific grew an impressive 19%. Japan was the lone region which did not see growth — revenues fell 14%. There are a few reasons for the decline in Japan. The main one being the Japanese government’s ban on SIM locking. This has hit operators’ ambition to subsidize iPhones if consumers can freely switch operators.

Outlook: Apple did not give formal guidance for the March quarter. However, the company did comment that its assumption was COVID-19 pandemic would not worsen. In addition, it is expecting solid YoY growth for the March quarter despite some challenging comps due to last year’s lockdowns, which helped companies such as Apple, Netflix and Amazon.

Often successful brands have difficulty keeping the interest of the next generation, which wants to be different. This has not been the case for Apple. It remains an aspirational and ‘hip’ brand to the young. This makes the outlook for Apple, at least medium-term, very promising.

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The post iPhone 13 Helps Apple Break Many December Quarter Records appeared first on Counterpoint.

China’s 11.11 Singles’ Day Sales

The Singles’ Day holiday in China has turned into a two-week event from being a one-day event originally. In 2021, volumes were down about 1% YoY. However, this can be explained from the earlier launch of the iPhone 13 series compared to the iPhone 12 series – volumes were pulled in earlier to September and October. Most of the major OEMs saw double-digit growth YoY.

Volumes were more concentrated among the major OEMs. vivo, Xiaomi, Apple, OPPO and HONOR were all relatively close in sales during the Singles’ Day holiday. There will probably not be one dominating brand through 2022. OEMs will rise to #1 around key flagship and high-volume product launches. This is similar to 2021 when Huawei, OPPO, vivo and Apple all claimed top spots around key launch months.

Another 11.11 takeaway is that there has not been measurable anti-Apple sentiment despite much anti-US sentiment through the growing trade tensions between the two countries. As Huawei volumes are on a steep decline now and many Chinese believe Huawei has been wronged by the US government, anti-Apple sentiment is both possible and logical. But still, Apple has managed to galvanize its position in the premium segment in China. Apple’s market share in the $800 and above price band in China has grown to the same levels as other mature markets.

US Black Friday and Christmas Season Sales

In the US, there was much larger store traffic during the 2021 holiday season compared to 2020. However, shortages hurt overall smartphone sales and pushed some connections into 2022, especially in the flagship space. The iPhone 13 series (especially the Pro and Pro Max models), Galaxy S21 series and the new Google Pixel 6/6 Pro saw shortages through Christmas, which pushed some sales into 2022.

With store traffic up, online sales have fallen. Online sales are larger than pre-pandemic levels but only about 5% higher. Carrier channels and national retail channels continue to woo consumers with large promotional offers, which need an old device to be traded in to secure the highest rebate. For the masses, it is easier to go into stores to make the exchange than to mail in devices and do a SIM swap.

The iPhone 13 family is a strong refresh for Apple. The company has struggled to meet the demand for the Pro Max and Pro models. Counterpoint surveys have shown some ‘buying down’ to the iPhone 13 due to these stockouts. However, shortages of older devices such as the iPhone 12, iPhone 11 and iPhone SE have also pushed consumers to the iPhone 13 and iPhone 13 Mini. We suspect the iPhone supply will meet demand in February.

After about seven weeks of sales, the iPhone 13 has remained the top activated SKU in the US. This can partially be explained by the better availability of the iPhone 13 than that of the Pro Max and Pro models. In addition, the iPhone 13 at $800 (minus promos) is seen as an attractive offer and easy sell for the major carriers and retailers.

For complete model-level sales details, contact info(at)counterpointresearch.com .

Related Posts

1. Apple Becomes Largest Smartphone Brand in China in October 2021
2. Can Samsung Remain The Leader in Smartphone Shipments?
3. Shortages, Promotions Shaped US Prepaid Market in Q3 2021
4. What Verizon’s Tracfone Acquisition Means for US Smartphone Market

The post Sales on Largest Shopping Days of 2021 Give Glimpse Into 2022 appeared first on Counterpoint.

MediaTek will continue to update its 700 series 5G line-up to cater to the mainstream market. The 800 and 900 series will support the high end. To ensure there is no confusion about which is the flagship series, MediaTek has named this new SOC the Dimensity 9000.

Other major announcements during the summit included a new partnership with AMD within the PC space, a new 7nm TV SOC, and FiLogic 130 connectivity for IoT devices.

Company recap and goals

• MediaTek saw extreme growth through the COVID-19 pandemic. Over 2 billion devices were shipped with MediaTek technology inside during the year. As Counterpoint Research has written, the company has grown to become the #1 smartphone SoC in terms of volume in 2021.
• There were record revenues in multiple segments.
• The company plans record R&D spending.
• MediaTek wants to grow its share within the flagship space. This has already been achieved within the TV space. The company wants to grow the Dimensity (smartphone), Kompanio (PC and tablet), FiLogic (connectivity and IoT) and Pentonic (TV) branding. Clearly, the most important goal is the Dimensity brand and growing share within the flagship (smartphone) segment.

Business update

• The company has grown to $17 billion in revenues. The first 3G smartphone with MediaTek was launched in 2011, 4G in 2014 and 5G in 2019. The smartphone chip space grew over 100% during the year and now represents 57% of the company’s revenues.
• Revenues are roughly distributed as follows:
  • 57% mobile phones, which grew 113% in 2021.
  • 22% IoT, computing and ASIC, which grew 43%.
  • 14% smart home, which grew 34%.
  • 7% power IC, which grew 39%.
• The company is #1 in smartphones, feature phones, ARM-based chromebooks, Android tablets, smart speakers, connectivity/broadband & networking, TVs, and optical drivers.
• Big drivers during the year were smartphones, tablets and ARM computing/chromebooks. The company shipped over 600 million Wi-Fi chips during 2021.
• NAM market:
  • Counterpoint Research estimates MediaTek eclipsed 30% market share in most months in the US. Some big volume design wins such as the Samsung A12 and A32 helped in this growth.
  • Shortages of 4G devices have helped grow its 5G market share in the mid-tier segment. More diversified portfolios have allowed for higher 5G market share, which has helped MediaTek.
• LATAM: Market share has grown from 35% to 45%. The company expects to grow over 50% helped by the severe 4G shortages. 5G will be a growth opportunity down the road.
• China: China 5G smartphone sell-through has been above 70% for a few months. MediaTek rode this wave of 5G transition.
• 2021 saw severe shortages in the 4G space. Look for MediaTek to increase market share and overall volumes of 4G SOCs in both mature markets and markets where 5G has not yet been rolled out.
• The company will continue to work hard partnering with the large Chinese brands which have seen volume consolidation in China. OPPO, vivo, Xiaomi and others will be looking to grow in overseas markets and MediaTek can grow with this expansion.

Dimensity 9000: MediaTek’s first attempt at 5G flagship space

It is always difficult to access a new chipset until devices are in the market and some true performance ‘in the wild’ can be tested. There are many new firsts for MediaTek and the industry in the Dimensity 9000. Possibly, the most important are the low-power improvements due to its best process node to date— 4nm. The new SOC has the latest ARM Mali-G710 GPU. It also supports the latest next gen memory technology LPDDR5 from Micron.

Other key specs include:

• CPU has a new ARM v9 architecture: 1x Cortex X2 3.05GHz, 3x Cort8GHzex A710 2.85GHz, 4x Cortex A510 1.8GHz and 8MP L3+6MB system-level cache. Comparing last year’s premium Android flagships, the company reports 35% system-level improvements and 10% core-level improvements. Faster application launches range from 16% to 55% improvement depending on the application.
• GPU ARM Mali-G710 MC10: The company expects 35% performance improvement and 60% power efficiency improvement.
• During the MediaTek executive summit, Micron announced that MediaTek has validated its LPDDR5X DRAM for MediaTek’s Dimensity 9000.
• APU has four performance cores and two flexible cores configuration.
• The company has found the AI performance 16% higher than Tensor and about 25% improved over current Android flagships.

Connectivity under FiLogic branding grows:

• There are opportunities outside of smartphones. WAN, LAN and PAN solutions saw strong growth during 2021.
• Even post-pandemic, Counterpoint Research expects data cards, 5G broadband internet for the masses, and automotive telematics to see solid growth during 2022.
• Global mobile operators are rolling out fixed wireless access. MediaTek is riding this wave with the T750 chipset for CPEs. It supports 5G, build on 7nm process technology, dual-band 4×4 Wi-Fi6, and integrated gigabit ethernet LAN ports. British mobile operator EE is an early customer.
• MediaTek announced a partnership with AMD within the high-power compute space. This partnership was many years in the making. MediaTek will provide the connectivity. First devices will be targeted at mid-range to premium-range consumer space and are a natural fit for gaming focused PCs. As security solutions improve, it can target the SMB/commercial space.
• The Wi-Fi portfolio within notebooks, retail, broadband and IoT is very large. Customers are tier one brands such as Amazon, Lenovo, Samsung, HP, Netgear, Linksys, BT, Telefonica and ecobee.
• Wi-Fi industry usually sees upgrades over 5-6 years. Between 2019 and 2023, Wi-Fi will move from Wi-Fi6 and Wi-Fi6E, and at CES 2022 MediaTek will demo Wi-Fi7. Initial testing with same number of antennas has seen speed gains of 2.4x. The update will also see improved latency and be better at puncturing out the noise of overlapping networks. WiFi Alliance is still finalizing the standards, which could be completed in Q2 2022.

TV business dominating with 70% global share and over 60% market share in the US

• 2020 was a banner year for TVs, which saw TV holding periods drop significantly. Counterpoint Research estimates 2021 remains strong at about 20% growth.
• MediaTek launched the Pentonic 2000 SOC. The new chip will be in the market late this year.
• Smart TV outlook is strong due to some major technology advances. 120Hz will help TVs grow as gaming consoles. It will also enable better picture-within-picture technology for multi-player gaming and multi-viewer TV watch ‘parties’.
• True 8k picture processing supported when 8k content is available.
• AI used to optimize memory usage. Great 4k UI, leveraging middleware for broadcast standards, helping OEMs scale internationally.
• Dolby Vision and Dolby Atmos supported. TV SOCs are also used in projectors. Monitors a logical business opportunity for MediaTek. So is industrial signage.

MediaTek chromebooks grew 96% in 2020 and 15% in 2021; consumer segments continue to drive volumes

• MediaTek will drive Kompanio branding.
• Due to school-from-home, chromebooks growth is well documented. Due to emergency connectivity bill in the US, there is still room for growth. Due to young school age users, naturally the holding period is short. Holding periods have been 3-4 years, but some school districts have announced only 18-month life cycles within younger ages. This increased installed base and shorter holding periods continue to drive volumes despite countries such as the US and Japan reaching saturation.
• Kompanio performance sees large leaps. There are three levels of quality marketed as 800T series, 900T series and 1000T series.
• 7nm process node helped power efficiency. Other specs include 2k displays, 120Hz, improved camera ISP with 16MP front/back cameras, Wi-Fi6E and BT5.
• Great spec improvements compared to last year’s Intel N4500.
• HONOR 1300T is a premium tier chromebook OEM which will hit the market in coming month(s).

Comments from CEO Rick Tsai

• CEO Rick Tsai was most proud of improvements in AI, 8k display support, camera/video/audio and CPU/GPU/DSP.
• Actively looking for new foundry partners (obviously not announcing prior to start), but reiterated the company is happy with TSMC, the leader in nm process node technology.
• Dimensity 9000 launch was the headliner but there will remain a long LTE runway. Shortages hurt 2021. MediaTek expects to grow its market share within LTE. Expect to see launches of new LTE chip(s) with increased performance.

Where was there little news?

• Automotive is not an area where MediaTek has momentum. There are some telematics solutions being sold, but it is not yet a cohesive story. Certainly, the company is looking at the space, but currently it is not a priority like the other growth segments.
• mmWave volumes not imminent. Counterpoint Research estimates sub-6 smartphone volumes will be about 86% of smartphone shipments in 2021. We expect an mmWave solution from MediaTek in 2022, but it will probably not be distinctive or disruptive. It will take MediaTek some time to prove its flagship Dimensity 9000 series is competitive, while mmWave is required in the US and possibly other markets in 2022. The technology will not be coming down into lower mid-tier or entry space anytime soon.
• Wearables and smartwatches need more time. There were no low-power solutions announced. With many high-growth segments, this has not been prioritized.

The post MediaTek Summit Key Takeaways: First Flagship 5G SOC, Tie-up With AMD, FiLogic 130 for IoT Devices appeared first on Counterpoint.

The key to Qualcomm’s revenue growth was its ability to dual and triple source manufacturing of key components, namely its Snapdragon 800 series SoC’s and its premium 5G modem.

Besides 21% growth within Snapdragon premium tier products, Qualcomm’s RF front-end components, automotive, and IoT components have grown impressively to become, cumulatively, a $10bn business. This has reduced the company’s dependence on Apple and mitigates some of the risk around if Apple eventually moves to making its modems in-house.

Other business units also contributed to Qualcomm’s bottom line; areas to watch include its drone platform, WiFi6 and WiFi6E solutions, XR platform, fixed wireless access solutions, wearable SoCs and its TWS solutions.

Source:  Company data.

Keys to the quarter and outlook for 2022:

• Global semi constraints continue, and Qualcomm has prioritized high-end / higher margin solutions.
• Dual and triple sourcing has helped but look for semi component shortages to continue through 2022 – especially during the first half of the year.
• New Android premium flagships in 2022 will likely bring in higher ASPs. Android foldables growth is also a growth opportunity in 2022.
• Qualcomm’s licensing division brought in revenues of $6.3 billion. The company is bullish on its innovation within cellular technology and the value of its patent portfolio. It continues to see premium Android OEMs purchase both its 5G SoC’s along with its RF front-end solutions.
• The RF front-end business continues to innovate with new ultraBAW filter technologies. At its most basic, these technology advances improve tuning within higher frequencies. As RF front-end continues to grow more complex, Qualcomm has gained revenue market share within the space.
• WiFi6 / 6E solutions will grow as the consumer electronics industry rolls out the technology advancements into different verticals.
• When XR hits critical mass, Qualcomm will be able to capitalize on greater XR adoption. Qualcomm is currently powering over 50 XR devices and most of the best-selling devices. Qualcomm also has interesting design wins within smaller verticals such as Peloton bikes and the Amazon ASTRO robot.
• Qualcomm’s fixed wireless access solutions will gain momentum as Verizon, T-Mobile, AT&T and other global operators’ role out the broadband option to consumers.
• Qualcomm’s automotive business unit grew 44% and Qualcomm remains aggressive in the space, growing outside of infotainment solutions. The company’s $4.5bn acquisition of the Swedish automotive technology company Veoneer will help to accelerate bringing new solutions to the market.
• Qualcomm IoT services suite supports over 30 verticals. Retail and digital signage continues to stay under the radar but the company is delivering to leading firms in the space such as Square, Clover, Honeywell and Panasonic. Qualcomm has also won IoT service contracts from cities such as New Orleans. IoT as a service to municipalities is a key area to watch.
• mmWave continues to roll out in the US and Japan. Qualcomm is the key supplier. It will be key to watch when China rolls out the technology. MediaTek may have solutions by the time China begins rolling out mmWave in earnest.

Finally, headwinds to watch (with varying effects on the company):

• Google (and other OEMs) using their own silicon for smartphones. Google global market share likely to remain under 1% and its ambition of growing the Android user base will not affect Qualcomm. Qualcomm remains the key supplier to Android premium and mmWave market. It also powers other Google products.
• Samsung Exynos could challenge Qualcomm within the $200-$400 price segments. There will be a competitive fight within this price segment.
• MediaTek remains a strong competitor and has grown to become the largest smartphone SoC supplier in the market. Qualcomm has growing premium, 8-series momentum and should continue to lead within premium and the growing foldables market. Battle will remain fierce within Dimensity 700/800 series and Qualcomm 600 and 400 series. Ability to supply in 1H2022 will be key. India, APAC, LATAM, and MEA will be key battlegrounds to watch.
• The China market continues to be sluggish. However, 5G sell through according to Counterpoint Premium Market Pulse, remains over 70%. OPPO, vivo, and Xiaomi have moved to supplying more 5G and higher-end devices. There will be a battle with MediaTek for design wins—especially within China.
• Apple, Samsung, and Xiaomi remain top customers of Qualcomm. Considerable market share declines of any of the three would be a headwind.

The post Multi-sourcing, prioritizing premium helps Qualcomm exceed market expectations appeared first on Counterpoint.

T-Mobile continues to run an aggressive $830 upgrade offer with a trade-in of a used device. The carrier also offers new customers or current customers (with a trade-in) a free Samsung A32, OnePlus Nord N200 5G or T-Mobile branded REVVL V+ 5G. These devices are $200-$282 at full retail price. Right now, there seems to be no end in sight to this aggressive 5G upgrade program. With T-Mobile improving its network, new opportunities have opened up within B2B, small town/rural America and fixed wireless access. Expect the carrier to continue to remain aggressive while it has a mid-band 5G rollout lead.

AT&T is having a strong start to the quarter. The carrier continues its promos and aggressive TV advertisement of upgrading its base. The third-largest carrier in the US continues to offer $700 off on many flagships with a trade-in. These promos are for both the base and existing customers.

Verizon started Q3 matching AT&T’s offer, but it ended this upgrade offer in July. We are watching if this will affect its net-adds during the quarter. So far, it appears T-Mobile and AT&T are winning the net-port war. Verizon continues to see very low churn and improving service revenue metrics with more unlimited subscribers.

Postpaid channels continue to outperform prepaid channels. During Q2, postpaid channels added an incredible 2.25 million phone subscribers.

Where are these subscribers coming from in the mature US market?

Here are three major reasons:

• Due to COVID-19 and extended work-from-home status, more companies issued a business line to employees. Even when lines were not business sponsored, business lines were added, many for gig economy work or simply to have a dedicated line for work-from-home.
• Due to extended school-from-home, more children received mobile lines to communicate and help with studying.
• Some of the subscriber gains can be attributed to carriers gaming the system. Free extra lines and large promos inflate net additions. These promos are especially prominent at the end of quarters to pad the quarterly numbers.

Other early takeaways from Q3 include:

• Samsung saw very weak shipments in June, which led to severe shortages in July. This was mainly due to COVID-19 hitting Vietnam extremely hard. A large percentage of A-series and S-series devices are manufactured there. Production resumed in July to normal levels and August sales increased, especially for A-series where it is gaining share from LG’s exit. The COVID-19 situation remains dire in Vietnam, and the OEM also has to navigate component shortages.
• Motorola volumes decreased significantly in August due to component shortages. It is too bad for the #3 OEM in the US as it was poised to win over considerable volumes from the exit of LG.
• Apple continues to remain shielded from the impact of component shortages. iPhone 12-series sales continue strong with ongoing 5G promos within the major carriers. The iPhone 12 mini has seen growing sales related to a promotion within prepaid channels that offers the device for free to switchers. B2B share gains have also helped.
• White label sales have increased due to LG and VinSmart’s exit and component shortages. T-Mobile branded REVVL devices, Cricket branded Vision, Influence, Ovation and Icon devices, and AT&T branded Calypso and Maestro Max devices have all seen higher sell-through in August. There are also opportunities for Nokia HMD and TCL if their volumes are not constrained.

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3. T-Mobile Bets Big on its 5G Network Lead
4. The John Stankey Era Begins at AT&T
5. US Carriers, Hardware Sales See Large, Positive YoY Comps in Q2 2021

The post Which is the Hottest US Carrier in Q3? appeared first on Counterpoint.

Other takeaways from Qualcomm’s quarter ended June 27:

• Qualcomm expects it will become the largest RF front-end supplier by revenue this year. The joint ventures and investments made years ago are paying off. A modem-to-antenna system becomes more important in 5G due to the increased complexities. Most of Qualcomm’s 5G SoC customers are choosing the company’s RF front-end systems.
• Impressive quarter for the latest high-end Snapdragon, the Snapdragon 888. Its design wins increased more than 20% QoQ.
• Further, the company noted the strength of its high-end 8-series mobile platform’s momentum. More than half of the 5G smartphone design wins are taking the high-end 8-series route. This is partly because high-end/high-margin smartphones were prioritized due to component shortages. Despite this, it was a solid quarter for the 8-series. Qualcomm’s customer base is growing here.
• Multi-sourcing strategies have helped. Qualcomm has multi-sourced the production of the 778G between Samsung and TSMC. The company says it is on track to materially improve supply by the end of 2021.
• Qualcomm has 155 5G license agreements, up 33% QoQ. It expects 5G handset sales in 2021 to land between 450 million and 550 million.
• On its fourth generation of mmWave, Qualcomm continues to lead in the 5G mmWave space. To date, it has mainly seen volumes in the US and Japan. However, there are over 180 mobile operators in the world investing in 5G mmWave. The key country to watch is China. China is expected to have a limited 5G mmWave launch ready for the 2022 Winter Olympic Games. The scale China would bring to mmWave would help other countries and regions roll out the technology more aggressively.
• IoT revenues grew 83% to $1.4 billion. The growth was fueled by industrial platforms and consumer EDGE networking hardware.
• Qualcomm’s automotive division has grown to a $1 billion per quarter business. These products include digital cockpit and cellular vehicle-to-everything (C-V2X) solutions, automotive telematics, and connectivity platforms. Qualcomm is riding the wave of more connected cars and more infotainment systems being added to cars.
• There are other areas with rich potential. They are in the development stages and seldom attract as much attention as mobile chips:
  • Qualcomm is in a good position with 5G mobile XR, PC-tethered XR and ‘boundless XR’. The company is a supplier to key XR OEMs with its Snapdragon XR2 platform and Snapdragon X55 5G modem – RF system. As XR grows, Qualcomm is positioned to grow with it.
  • Qualcomm is riding the wave of increased wearables growth. With Google and Samsung teaming up and hardware performance leaps continuing, there will be better diversification of smartwatches. Expect more optimized designs for children, seniors, sports/fitness, enterprise/B2B and fashion.
  • As mobile networks become virtualized, flexible and disaggregated, Qualcomm has solutions for 5G RAN platforms, including those for small cells.
  • Qualcomm will be able to ride the growth of 5G mobile gaming. The mobile gaming experience is vastly improving with 5G due to its better reliability and lower latency. Qualcomm Elite Gaming offers quick touch with 20% improvement on input response, supports over one billion shades of color, and is available on Android streaming platforms.

As chip shortages continue, demand will be stronger than supply in all of Qualcomm’s business units. 2021 continues to look very promising for Qualcomm’s Snapdragon SoCs for smartphones, as well as for all of the other growing business units.

The post Qualcomm Diversification Strategy is Working appeared first on Counterpoint.

Interesting takeaways from AT&T’s quarterly results:

• AT&T’s ‘upgrade the base’ campaign remains on track and successful. The carrier seems committed to this expensive but effective way of reducing churn and pushing subscribers onto unlimited 5G services.
• AT&T’s service revenues grew 5%. Impressive growth, which will likely keep AT&T aggressive on upgrading the base.
• Equipment revenues were up 32% YoY. Much of the growth was due to a poor Q2 2020 due to COVID-19 lockdowns. However, even after taking COVID-19 into account, smartphone sales were strong, and AT&T punched above its weight selling iPhones and flagships during the quarter. Again, much of this can be attributed to the same promotions being offered to its base – the best deals are not reserved for ‘switchers’ coming from other carriers.
• AT&T is divesting its media units. DirecTV was a disaster. TimeWarner faces similar problems plus it was hit during COVID-19 as cinemas and sports activities were shut down for many months. It appears AT&T is worried about debt and will focus more on wireless, 5G and new 5G services, reducing the leverage of media. Verizon is ahead of AT&T here, already divesting most of its media investment errors.
• AT&T continues to invest to grow digital sales. Counterpoint’s Online, Offline Channel Share Tracker estimates online sales increased to over 33% during COVID-19 but have reverted to just above pre-COVID levels. Prepaid is slower to transition to online sales. AT&T will be adding more Cricket authorized retailers, which will help its prepaid business.
• To further help digital sales, AT&T is adding same-day delivery. AT&T aims for “more sales via less stores”. This is an especially good goal for postpaid, which is more accustomed to digital purchases.
• AT&T is focusing on improving the customer experience, shortening sales distribution, and quickening customer service responses. T-Mobile has done a nice job improving in this area and AT&T is pushing in similar areas. This will help keep churn low.
• Within prepaid, LG volumes will be quickly selling through for good. Moto and Samsung have been the first OEMs to gain on LG’s void. Top-sellers within prepaid have been the Moto G Power 2021, Moto G Play, Samsung Galaxy A01 and Samsung Galaxy A12.
• Surprisingly, AT&T sounds less optimistic about fixed wireless access (FWA) than Verizon and T-Mobile. The carrier is focusing on AT&T Fiber and its faster speeds. It continues to add fixed broadband subscribers — 246,000 during the quarter — and penetration has increased to 36%. AT&T expects to add over one million fiber broadband subscribers in 2021.
• AT&T added 4.2 million connected device subscribers during the quarter. It had a very solid wearables quarter. Connected cars continue to be strong, too.

The post Q2 2021: AT&T Has a Strong Wireless Performance appeared first on Counterpoint.

T-Mobile: With 300 million Americans covered by its low-band 600MHz spectrum and another 150 million by its mid-band 2.5GHz spectrum, T-Mobile continues to own early 5G bragging rights. By the end of 2023, the carrier expects to have over 300 million covered by its mid-band 5G. Medium-term, T-Mobile will lead the US 5G rollout race.

This 5G lead has helped T-Mobile continue to dominate the net add race, something we think will continue in Q2. Free Netflix, 55+ promos and other ‘un-carrier’ moves continue to keep churn in check. T-Mobile has also done a formidable job transitioning subscribers from the Sprint network to the T-Mobile network — over 60% of Sprint subscriber traffic has now shifted to the T-Mobile network. The integration cost savings have also been above expectations. The carrier announced an expected $7.5 billion of P&L run rate savings, 25% higher than the original projection at the time the acquisition went through. Metro by T-Mobile also continues to see strong subscriber growth, particularly in rural areas. The partnership with Walmart will help. Finally, new push into fixed wireless access could add incremental revenues and help brand momentum. This is probably not meaningful until 2022-2023, but T-Mobile’s goal is to have 8 million fixed wireless subs by the end of 2025.

AT&T is in the process of unloading some big-ticket media, which will help the carrier focus on 5G rollouts, building its subscriber base, adding new 5G services, and growing broadband. During the quarter, we see AT&T winning the port war against Verizon. Its ‘same pricing for all’ campaign to upgrade its base has continued on TV and other media. It is not the only carrier doing this now, but it remains the loudest.

Equipment revenues were up 45% YoY in Q1 2021 and we expect to see similar comps in Q2 2021. Bestseller devices during the quarter were the iPhone 12 Pro Max, iPhone 12, and iPhone 11. AT&T won its share of iPhone and premium Android subscribers in Q2.

On the prepaid side, AT&T’s Cricket Wireless has surpassed 13 million subscribers and continues to grow in rural and Hispanic regions.  The Samsung Galaxy A01 and Moto G Power were top sellers within prepaid.

Verizon matched AT&T’s promos for upgraders and switchers, upgraders being the key. This helped the quarter and especially June sales. We expect very low churn for Verizon and potentially some better B2B device spending.

The near-term focus for Verizon is closing its acquisition of Tracfone. Verizon has been a distant third behind T-Mobile and AT&T within prepaid with only about 4 million subscribers—about 5x smaller than T-Mobile and AT&T. To get the deal over the line, Verizon has recently made promises to keep low-end service costs frozen for three years and will continue to support government programs such as Lifeline.

US Cellular may have been challenged within postpaid, but its renewed focus on the prepaid, business, and government segments will likely help the quarter. There have been limited retail changes, but a more focused approach on digital/online sales is helping, maybe not in terms of overall subscribers but in margins. Counterpoint churn data shows AT&T stole the most subscribers from US Cellular during the quarter.

Return of the low-end of the market: COVID-19 disproportionately affected low-end volumes. While prepaid is seeing some mixed signals, we expect solid results from Metro by T-Mobile and Cricket Wireless. Boost is an exception, and we expect net add losses here. Mint Mobile, Visible and Consumer Cellular are adding to competition with their niche appeal. Tracfone had a poor quarter losing 549,000 subscribers — it noted some prepaid to postpaid migration as vaccinations progressed and consumer confidence improved.

Device shortages are affecting prepaid, especially the low inventory of Samsung A-series, which has been hurt by both component shortages and the COVID-19 spike in Vietnam, where much of the OEM’s manufacturing is done.

Compared to Q2 2020, this year’s Q2 is a strong rebound quarter. 5G sell-through is clearly over 50% of total sales, and the second half of the year will see US carriers continuing to push to upgrade the base to unlimited 5G service plans.

The post US Carriers, Hardware Sales See Large, Positive YoY Comps in Q2 2021 appeared first on Counterpoint.

The global refurbished smartphone market saw healthy growth across most regions in H2 2020. The market more than made up for the slump in H1 2020 with a modest 4% increase in 2020 compared to 2019 volumes. Counterpoint expects a higher increase in 2021.

The Surge in H2 2020

Due to the sharp deceleration in H1 2020, mainly due to COVID-19, the refurbished smartphone market saw a rise in demand and supply in H2 2020. Commenting on the dynamics of the market, Senior Research Analyst Glen Cardoza said, “While there was limited supply of smartphones in the secondary market in the first half of 2020, there was a sharp increase in both demand and supply during the second half of 2020. When the markets opened, most refurb players saw a surge in resell volumes and trade-ins. All regions saw YoY volume increases in H2 2020. While some markets like LATAM and Southeast Asia took time to recuperate in H2 2020, other regions like the US, Europe, India, and Africa bounced back and tried to increase supply and distribution-related activities.”

Highlighting that Apple had gained share in the secondary market, Research Director Jeff Fieldhack said, “There has been no slowdown in the appetite for Apple within the secondary market. In fact, over the past year, it has increased compared to its competitors. Apple’s share in the global market for new smartphones was just over 13% in H2 2020. Its share in the secondary market over the same period was over 44%. In addition, Apple’s secondary market ASPs (average selling prices) are almost three times higher than the average of all its competitors. Even with the rollout of 5G by over 150 mobile operators in over 70 countries, the demand and ASPs for Apple’s refurbished LTE portfolio remain elevated. This is helping Apple grow its installed base as many of the Apple buyers in the secondary market are first-time buyers.”

Additional trade-in offers and a focused approach on circular economy initiatives are fueling the demand in developed regions like Europe. In contrast, developing regions like India and Africa are showing a higher proportion of new businesses and improvements in domestic tech and repair capabilities. Cardoza added, “China is slowly becoming a more difficult market for the secondary market. There is still high demand, but costs have increased for key components. Also, there is more oversight at international ports. The China–US trade war has also added more risk, making many buyers more conservative in their purchases. We expect more secondary market volumes to move to other areas such as Africa, Japan, India, and Europe. There are established secondary market companies, with new companies also moving into these regions. There is also an appetite for flagships from premium brands but at mid-tier pricing.”

Background:

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts:

Jeff Fielhack

Glen Cardoza

Follow Counterpoint Research
press(at)counterpointresearch.com       

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The post Global Refurbished Smartphone Market Volumes Grew 4% in 2020; Higher Growth Expected in 2021 appeared first on Counterpoint.