Welcome to the MediaTek 20 24th Quarter Investors Conference Call. Financial results and presentations for today's call are available on the Investors section of the company website at www.mediatek.com. Now I would like to turn the call over to Ms. Jessie Wang, with Deputy Director of Investor Relations. Ms.
Wang, please go ahead.
Good afternoon, everyone. Joining us today are Doctor. Rick Cai, MediaTek's CEO and Mr. David Gu, MediaTek's CFO. Mr.
Gu will report our Q4 and 2020 full year results and then Mr. Doctor. Cai will provide our prepared remarks. After that, we will open for Q and A. As a reminder, Today's presentation will provide forward looking statements based on our current expectations.
The statements are subject to various to risks and factors, which may cause actual results to materially differ from these statements. The presentation materials supplement non T4's financial measures. Earnings distribution will be made in accordance with financial statements based on papers. For details, please refer to the Safe Harbor statements in our presentation slides. In addition, all contents provided in this teleconference are for your reference only, not intended for investment advice.
Neither MediaTek nor any of independent providers is responsible for any actions taken in reliance on content provided in today's call. Now I would like to turn the call to our CFO, Mr. David Du for financial updates.
Thank you, Xueersi. Now let's start with 2020 4th quarter financial results. The currency here is all in NT dollar. Revenue for the quarter was $96,400,000,000 down 0.9% sequentially and up 49% year over year. In U.
S. Dollar terms, Revenue for the quarter was US3.3 billion dollars up 1.5% sequentially and up 57.9 percent year over year. Annual revenue totaled NT322 1,000,000,000, up 30.8% year over year. In U. S.
Dollar terms, revenue for the year was $10,900,000,000 up 37.2 percent year over year. Gross margin for the quarter was 44.5%, up 0.3 percentage points sequentially and up 2 percentage points year over year. Gross margin for the year was 43.9%, up 2 percentage points from the previous year. Operating expense for the quarter were TWD27.5 billion compared with TWD28.4 billion in the previous quarter and TWD21.3 billion in the same period last year. Full year 2020 operating expense was NT98.3 billion dollars compared with NT80.5 billion in 2019.
Operating income for the quarter was NT15.4 billion dollars up 5.1% sequentially and up 146.9% year over year. Non T1st operating income for the quarter was RMB16.1 billion. 2020 full year operating income was RMB 43,200,000,000, up 91.5% year over year. Non T First operating income for the year was NT46.1 billion dollars Operating margin for the quarter was 15.9%, increased 0.9 percentage points from the previous quarter and increased 6.3 percentage points from the year ago quarter. Non T1st operating margin for the quarter was 16.7%.
Operating margin for the year was 13.4%, up 4.2 to the percentage point from 2019. Non T First operating margin for the full year was 14.3%. Net income for the quarter was TWD15 billion, up 11.9% sequentially and up 134.3 percent year over year. Non T1st net income for the quarter was NT15.6 billion dollars. Net income for the year was NT41.4 billion dollars up 78.6% year over year.
Down T1's net income for the year was NT43.8 billion dollars Net profit margin for the quarter was 15.5%, increased 1.8 percentage point from the previous quarter and increased 5.6 percentage points from the year ago quarter. Non T First net profit margin for the quarter was 15.1%. Net profit margin for the year was 12.9%, up 3.5 percentage points year over year. Non TIFRS net profit margin for the year was 13.6%. EPS for the quarter was NT9.35 dollars up from at $8.42 in the previous quarter and up from $4.03 in the same quarter last year.
Non T First EPS for the quarter was NT9.73 dollars For 20 24 years, EPS was TWD26.01 compared with TWD14.69 in 2019. Non T1st EPS for the full year of 2020 was TWD27.52. The detailed reconciliation table for our T First and non T First financials is attached in our press release for your information. And that concludes my comments.
Thank you, David. Now I would like to turn the call to CEO, Doctor. Rick Tsai for prepared remarks.
Thank you. Good afternoon, everyone. I hope that you and your family are All safe and healthy. Today, I will start with MediaTek's 2020 achievements and 2021 outlook. Then we will walk through highlights in in each segment as well as provide our Q1 2021 guidance.
2020 marked a milestone year for MediaTek and we believe it is just the beginning of our growth trajectory. We concluded 2020 with good 4th quarter results, both revenue and gross margin coming in at the upper end of our guidance. This brought our full year revenues to record level of US10.9 billion dollars All the 3 product groups grew at year over year double digit percentage rate in revenues in 2020. In addition, we delivered very strong year over year growth in in 2020 across all of our key financials, financials metrics, in spite of macroeconomic uncertainties at unfavorable foreign exchange rate. 2020 gross margin increased for the 3rd consecutive year and operating income nearly doubled from 2019.
Quarterly operating income has been growing year over year for 12 quarters in a row. In 2020, we demonstrated Technology leadership by gaining meaningful share in 5 gs and Wi Fi globally in the 1st year of the end market take off. Moreover, our diverse analog, Multimedia and computing IP portfolio enabled products such as smartphone, to digital TV, etcetera, to meet the surging global demand. Adding all these up, MediaHek powers your everyday life with 2,000,000,000 devices in 2020, a substantial number that further strengthens our cross platform competitive advantages. These solid performances in the past few years are the result of our investments in key technologies and IP, which lead to a structural change in our business and product portfolio.
The structured change has established a strong foundation for MediaTek's growth trajectory and makes us more resilient to potential short term fluctuations. For 2021, we believe It is another year of strong revenue growth in spite of the strong NT dollar appreciation. We will be able to outperform the markets with expansion in multiple areas. While we aggressively expand addressable markets and market shares in all major product segments, MediaTek still maintains our gross margin in the current range of 43% to 44%. Moreover, we expect our operating profit dollar and operating margin to increase strongly again in 2021.
Most importantly, we will continue to invest aggressively in R and D this year. With a US3 $1,000,000,000 budget in order to build more technology assets and solidify the foundation for our next phase of growth. We are confident that the of our strong IP portfolios and diverse product platforms will give us unique competitive advantages in expanding multiple serviceable markets. Let me give you a couple of examples. N70 Modem while giving us a good head start in the 5 gs smartphone rent cycle, covering complete market segments as well as global footprint.
We'll also enable MediaTek's access to global operators through a synergized portfolio, including Wi Fi in our set of boxes. Our industry competitive ARM based CPUs And multimedia IT have not only empowered the high end mobile application processors, but also created major opportunities in the computing, conferencing and surveillance applications. These multiple growth engines and others, we believe, will drive our strong mid to long term profitable as sustainable growth. Now, I would like to go through 4th quarter business highlights for each segment and then talk about the Q1 guidance. First of all, growth area, which mainly consists of IoT, CMIC and basic, accounted for 29% to 33% for Q4 revenue.
This segment performed better than company average in the 4th quarter and grew more than 40% compared to a year ago. Several products, including Wi Fi and Power IC, achieved all time high quarterly revenues. For IoT, WiFi expansion is driving the business. We are seeing increasing Wi Fi 6 demand in high end routers, broadband and TV. Furthermore, MediaTekai WiFi6 solutions have been adopted by multiple global notebook and Chromebook brands.
The first project for high end WiFi gaming notebook will fit the market in the Q1 with more to come. On the technology side, we are selected to be on the test bed for WiFi 6E and have already started Wi Fi 7 Investments for continuous expansion. For Power IC, we announced to acquire Intel's Imperial Power Business in the 4th quarter. This would provide a strategic product portfolio and enable more high end enterprise business in the future. We are seeing strong demand in power ID and discrete power components across various product applications.
For ASIC, several new enterprise ASIC projects are scheduled to commence volume production this year. Host selling new game consoles would also continue to contribute revenue throughout their product cycles. Meanwhile, we are working on new projects, both for enterprise and consumer products to expand our revenue in the following years. Next, smart home and other, primarily TV and other traditional consumer electronics accounted for 21% to 26% of revenue in the 4th quarter. Revenue momentum was somewhat constrained by capacity in the 4th quarter.
TV market by unit is relatively stable, but we continue to see customer traction on better picture quality and faster wireless connection to accommodate the online streaming trend. Our pioneering AI integration and connectivity perfectly fits the demand. In 2021, we are confident to maintain our global leading position to power global TV in all segments with further share gains. Now on to mobile computing, which includes smartphone, tablets and Chromebooks, accounted for 45% to 50% of the 4th quarter revenue. Mobile computing revenue again grew very strongly with more than 80% year over year increase, driven by higher 5 gs adoption in mass market.
For 5 gs, MediaTek launched a complete product portfolio and engaged with all global major Android smartphone brands in 2020. Our 5 gs market share has already exceeded 40% in markets we serve in 2020. We aim to further increase shares this year. 2021 will be the 2nd year for the phenomenal 5 gs migration. We forecast global 5 gs smartphone shipments this year to be more than 500,000,000 units, 2.5 times of last year's shipment.
MediaTek's complete product portfolio is fully ready to capture the migration opportunities. For high end, we have design activities with multiple customers using Dymancity 1200. End devices are expected to launch in late Q1. In mid range and mass market, DIMENSITY 80700 series will continue to ramp strongly. Furthermore, MediaTek closely works with global operators and customers.
Our 5 gs solutions will have higher presence in regions, including U. S, Japan and European countries this year. On the SIM modem side, Logos with MediaTek 5 gs SIM modem in line are scheduled to launch in the Q2. We expect to see more models and new applications such as CTE with global operators in the second half of the year. Development of millimeter wave, SIM Modem and SoCs is on track with customer samples this year for revenue starting 2022.
For 4 gs, We will introduce new products for better user experience this year. 4 gs remains a sizable market, and we believe we will and continue to be the market leader. Another driver is the fast growing Chromebook market. We forecast Chromebook units to increase approximately 60% year over year this year. As a leading player in ARM based Chromebook GPU, we are confident to acquire new market share in the midterm.
Now turn to Q1 guidance. We see above seasonal demand in the Q1, partially offset by the ongoing supply constraint. Mobile computing revenue in the Q1 are expected to increase significantly quarter over quarter and more than doubled on a year over year basis, driven by 5 gs smartphone ramp as as well as share gains in both 4 gs smartphone and Chromebook. Growth area is also expected to grow strongly year over year, thanks to healthy demand across the board. For the Q1 revenue analysis, there are 2 factors I would like to inform you.
The first is unfavorable foreign exchange rate. The recent FX fluctuation has a 3% impact on our revenue in NT dollar compared to the last quarter. The other factor is a full quarter revenue exclusion from Illytec, which affects 2% to 3% of revenue in U. S. Dollars.
With that, at a forecasted exchange rate of NT27.9 to US1 dollars We expect our Q1 revenue to be in the range of to $96,800,000,000 to $104,100,000,000 flat to grow 8% sequentially and up 58% to 71% year over year. In U. S. Dollar terms and excluding the above mentioned divestment, our first revenue were to increase 6% to 14% sequentially. 1st quarter gross margin is forecasted at 43.5 percent, plus or minus 1.5 percentage points.
Quarterly operating expense ratio to be at 26.5 percent plus or minus 2 percentage points. That concludes my prepared remarks. Thank you.
Thank you, Rick. We are now ready for Q and A. May we have the first question please, operator?
Yes. Ladies and gentlemen, we are now in question and answer session. To cancel your questions, please press 2. And as a reminder, it is greatly appreciated that you turn off the speaker phone mode of your device to prevent possible echo effect. We thank you for your cooperation.
Thank you. The first to ask questions, Gokul Harihalan, JPMorgan.
Happy New Year and congratulations on a great result. Thanks for taking my question. My first question is on 5 gs. Now that we are getting to reasonably Hi, penetration in China for 5 gs. Could we talk a little bit about how the other markets It will evolve based on your conversations with customers.
Do we start to see rapid cycle adoption happening in some of the other markets? We have been working with some of the operators, etcetera. So could you talk a little bit about how the non China 5 gs markets will be evolving as we go through the rest of this year. I think first half probably is still going to be very strong in China. But as we get to a higher degree of penetration, Could we talk a little bit about 5 gs in non China markets?
And also on 5 gs chips, do you see any supply Tightness at this point given a lot of capacity tightness at the foundry level? And I had a follow-up question for David as well. Thank you.
Okay. I brought this first answer about the 5 gs non China market. I mean to start with that, I think last year we're kind of Talking about even last year was the 1st year of a 5 gs product of Cyclone. We actually already launched a few products in the U. S.
Market already. And also not just on the smartphone side, but also on the fingerprint side for this year, I think Intel's without fingerprint will start to launch this year as well. So overall, I guess, not just this year, I think starting from last year, we We see the global market, not just the China market as our addressable market. But in terms of market size or our revenue contribution, even for this year, I think the majority of the revenue contribution, especially for the 1st quarters we talked about earlier, is going to still be mainly from the China side. We're trying to forecast for the non China 5 gs contribution this year, at least for Q1, probably will still be a mild, going to be minor.
I think for the global 5 gs smartphone demand, China probably will still for 2021. As we said in the remarks, we expect to see RMB 500,000,000 or more units to be shipped. I think, among which, at least 60% will be in You have a question on On Baiji? Yes. There is still supply chain.
Overall, I think that is not really news to everyone. We are I think we, Media Tech, is able to basically
yet, I think, sufficient capacity from our supplier partners.
I believe this tightness will continue at least throughout the next couple of quarters. We Despite that, we as we said in the prepared remarks, we still expect MediaTek to gain market share in 5 gs smartphone shipments, SoC shipments, but we are confident we can achieve that.
Got it. Thank you very much. Just one follow-up question on the operating expense. I think if I try to back out employee bonus from last here. Looks like OpEx grew about 15% to 20% last year.
David, could you give us some indication in terms of how you're budgeting for OpEx growth this year, even growth is really strong from a top line perspective as well.
I think for the OpEx full year this As the CEO, we could talk about this year we increased our ownvo investment more aggressively to be precise in our R and D. So I think for the Q1, probably the best way to factor in for operating expense, excluding profit sharing is roughly NT20 1,000,000,000 to NT21 1,000,000,000 roughly for the Q1. For the full year, probably the better way to think about that is from a ratio I think the total OpEx ratio, we do kind of forecast given the overall revenue coming up, given the operating expense, dollar increases, Our view is actually the OPEX ratio should be coming down. I think the 1st quarter's ratio could be a good reference for the full year.
Got it. Thanks, David.
Next, we're having Sebastian Ho, CLSA. Go ahead please.
Thank you for taking my questions. So first question is I'd like to ask about the gross margin and overall profit margin outlook. Given the supply constraints across many products of the company and also your peers and also the industries. So I'm curious about how do you see this will affect the pricing And also the margin outlook for the company this year, which may potentially be more positive.
Okay. Sebastian, I think when we talk about the gross margin, there are several factors that we need to balance in our I mean supply situation It's one thing you kind of mentioned. From our perspective, like the CEO talked about earlier this year, I think overall strategy for us is Trying to aggressively expand the market share across all three major business lines. And more importantly, we're also trying to branching out into different product So consider everything and also consider more importantly as one nonfactor is competition. While we're trying to balance everything out, I think our overall strategy this year He's trying to take advantage of our very strong 5 gs position and try to expand into 5 gs and also expand addressable market and market for other products as well.
In the meantime, maintain our gross margin for this year roughly in the range of 43% 44% basis stabilizing it. But I think what we're looking for this year is we just another year, very strong growth operating margin, both from a dollar perspective and also from a ratio perspective expansion. I think that's our overall strategy here.
Right. Thanks, David. Just one follow-up on the OP margin expansion that you just Increased by 4 percentage point and you mentioned that it's another strong year. So can we expect a similar 4 percentage point or even more magnitude of the increased OP margin for this year?
In terms of magnitude, unfortunately, due to regulation, we probably will not be able to come in. Probably the better way to think about it is from the dollar operating margin dollar perspective rather than from the ratio perspective. So for the operating margin dollars, I think we feel very comfortable we'll increase strongly. So the ratio I think will increase as well, but every year the ratio will be different, Given the fact that SARS right now is very different.
Okay. Thank you. My second question is that Doctor. Cai has mentioned that there are several AC projects that will enter commercial production this year. I think last year, I think the you have shared with us about the cloud AI and GenComm, so this ASIC.
So I'm curious whether you could elaborate more with us about what kind of the projects in which Applications that we may potentially see reaching production this year and how would that be if it's possible to give a little bit Quantitative numbers about how in terms of the incremental revenue contribution from this new ASIC, would it be as meaningful as Those exit projects contribution last year or even more? Thank you.
The ones you've mentioned, the asset project in the data centers and the Game consoles, of course, are now in production in 2021. We are aiming continuously at hyperscaledatacentermarket. And also, We're aiming at 5 gs infrastructure segment. Not to mention of course, we continue to spend time and resources on the ConsumerClub, which we are a leading player. The incremental revenue, David, do you want to comment?
Yes. For the full year incremental revenue, I think on the given the fact last year, we are close to RMB11 This year is actually really solid. I think for the incremental, on the relative scale, we will be small. But on the
Y o Y growth, I
think we're still looking for very strong double digit growth.
Okay. Okay. Last question from me is that we I think that we do hear some of your customers have had overbooking behaviors at both you and your competitors. So I'm just Curious about how we you probably definitely see that as well, but just curious how the company manage the customers, This kind of the overbooking forecast versus and how do you going to fulfill the demand? And also there is also supply constraints as another factor.
So just curious if you could share with us how do you mitigate
As you know, regarding the customer demand, we're also looking at the channels inventory situation, both from the customer channel side and also from the retail channel side. So So normally what we will do, we will balance it out and put some of our own judgment on that. So far, especially based on the channel inventory and also from the customer Even though given the fact right now, some of the capacity shortage is a global phenomenon. So you can rest assured The customer will come in with some overbooking situations over there. But once we balance it out with General inventory situation and also the customary inventory situation, we still feel right now overall it's comfortable.
Okay. We don't really see any strong overbooking, especially on the inventory side. Maybe on the demand side, people are trying to ask for more, but the actual the Products we can deliver or the whole industry can deliver and especially when you consider the channel inventory and the customer inventory, we believe right now it's still healthy
Okay, great. Thank you.
Now the line is open to Bruce from Goldman Sachs.
Hi, good afternoon. Thank you for taking my question. Very, very good result. I think I'm very happy to hear that management talking about like long term growth I've been asking this question for multiple quarters, but can you give us a little bit more color in terms of like What is the size for all these new addressable markets such as ARM based CPU? What kind of Talk to address what market what kind of size because MediaTek already achieved like $10,000,000,000 revenue and we need like sizable adjusted market to feel the growth.
In addition, management does not can we have more color in terms of your smartphone revenue growth in multi years? TSMC suggested that their smartphone revenue will grow similar with the corporate average with 10% to 15% for the next five Yes. Can we assume that MediaTek smartphone revenue will grow even stronger than that as we believe MediaTek will continue to benefit from the market share again?
Bruce,
the same we are looking at So quite a complex situation because we cover such complex portfolios. But what I can say is the we're seeing, for instance, let's just To play a couple of the growth areas in a rough way. We are seeing about, say, dollars 15,000,000,000 to 16,000,000,000 for our growth area, which means we have a long way to go. We are doing well, quite well. That business grew year over year more than 20% last year, but the market share we have there is still definitely below 25%, that kind of a range.
So we are confident Just to give you example, the growth area, we have a pretty for the growth. For the smartphone 5 gs, Last year, this year, I think we're talking about really very A very strong growth kind of
a number.
To understand what we're talking about now is about, just by 5 gs smartphone alone. Of course, we thought our market share over there is higher.
But still,
I think we're still below 30% or 35% in market share. So I cannot tell you exactly the CAGR for the next 5 years. But I can tell you, the growth rate last year, this year and next year will We are substantially higher than the number you just
mentioned. Okay.
Thank you.
Okay. Another
question for me is that, can we talk about that 5 gs on smartphone chip ASP erosion year on year. So what is the blended based ASP erosion when we are doing the 4 gs era during the year 2 As we're moving into the 2021, what is the ASP version for 5 gs?
We probably won't be able to comment specifically for 5 gs ASP broaching. Instead, I think probably the better way to think about smartphone as a whole. So the blended smartphone ASP due to the 4 gs, 5 gs transitioning and we believe actually this It's going to be another year for the question from a blended ASP perspective. Because when you look at the global market perspective, The overall I think last year the overall shipments compared to 2019 is coming down a bit. But this year we believe the global shipments should be close to 1.2 to 1,300,000,000 units globally back to 2019 level.
But more importantly, I think the dollar content, basically the ASP on a blended basis, It's actually going to be much higher. So probably that's the best way to look at that. Because again, if you only look at 5 gs ASP, because right now we're trying to expanding to the different sectors with different time frame. For example, earlier this year probably we have the new product. For example, Diamenci 1012 100 Coming out on the high end, probably middle of this year, we're going to march into the mainstream.
So it's very quarter by quarter. So it's not going to be the good indicator. Probably the better way to think about that It's from a full year blended ASP perspective.
Okay. So what is the revenue split in What is your revenue split in between 4 gs and 5 gs in 4th quarter?
We didn't really disclose those numbers, but I can give you from a direction Last year, on a quarterly basis, I think 4 gs revenue is going to still greater than 5 gs. But starting from Q1 this year, we see The pivot point coming out, I think starting from Q1 this year, the 5 gs revenue will grow even in 4 gs starting from Q1. And I think that trend will continue for the full year.
Okay. Last question from me is that I heard that management suggest that the long term gross margin will be stable at the current level. I'm a bit surprised to hear that because as management mentioned, you have a lot of enterprise chip is ramping up, which supposed to be higher gross margin, 5 gs smartphone supposed to be higher gross margin. We also have a lot of growth segment which has accelerated product mix. So We are very surprised to see the growth on the current level.
Can you provide a bit more color on that?
First of all, I think the CEO, Doctor. Tsai, was talking about for 2020, not for the long term. I think every year the strategy is 2021, so it's actually different. So I think to agree with you, we have a lot of growth opportunity. So for 2021, we have some strategy goal trying to reach.
So that will be our goal and our strategy target to maintain that in the 43% to 44%. It doesn't mean that's a long term cap. I think that's how I talked about earlier.
Next, we'll have Roland Xie from Citigroup for questions. Go ahead please.
Thanks. Very good result. First question Also just follow-up for the gross margin. For your dimension, the 12 pound gs is made by TSMC 6 nanometer process. I think definitely it's better in performance.
And how does the cost and overall effectiveness compare to previous Dimensity 1000x7 nanometer. Is this going to be a product with a better margin or with lower cost and better margin than DIMENSITY 1,000?
Rohit, we normally our policy don't really disclose the for product gross margin.
Yes. But how about the product wise, I think definitely I think Migrate with this new technology, what is the effectiveness for you to migrate from 7 nanometer to 6 nanometer?
I think definitely 1200 is going to be better pricing compared to 7,000 because actually right now we're adding into even a higher rate of that. I think probably that's another way to answer your question indirectly.
Okay. Understood. So we've led this better pricing, so is this a 43% to 44% gross margin this year, conservative number. So this is my
Yes. Well, I won't say it's conservative. Again, you need to consider a lot of other sectors. In addition to We also have other lines of business as well. And also, like we explained earlier, even for the 5 gs Specifically, we're also going to have high end.
And also in the meantime, we're talking about the volume really doubled. So you can assume that the huge volume will not only come out from the high end were coming from the entry level as well. So I think that's the continuation of the all product segments and also more importantly different business online.
Roland and I guess to everyone also, this year continues to be, as we said, as you asked, supply constraint year. And you all know that The all the suppliers, front end and back end, are increasing their price. We are doing, of course, everything we can to past some of those cost increase to our customers, but this is Not a one shot type of thing that we can achieve. It takes time and So the situation is quite dynamic. We're talking about easily a 0.5 points to 1 point type of a difference just because of that.
So with that in mind, I hope You can also keep that in mind. We have this supply side cost issue. And I think actually, if anything, we are getting relatively good price from our suppliers compared to others many other companies. But still, the impact on gross margin cannot be just brushed away. Thank you.
Thanks for your clarification. So follow-up, you said about the cost increase for this supply constraint. So can you pass through the cost to your customers? And also for these supply tightening. Do you think this is favor you or against you in terms of the competition point of view?
Thank you.
Well, I think let's talk about cost first. I think like the CEO explained earlier, I think we will definitely try to add some of that to our customer. But sometimes we have some time delay and also we also need to consider the overall competitive situation. Don't forget actually that we have Several companies out there all have been quite aggressive about 45 year market share. I think that's the key.
Okay. So how do you see the overall competition across the board?
You mean the competitive competition or just
Yes, price competition or product competition from your competitors?
As we can see, starting from last year, Even though that's the 1st year of our 5 gs rollout, we actually get a very good market share. I think that's actually Surprise everyone, which including our competitors. So you can rest assured they're trying everything they're trying to come back and try to get more market share back. So I would say we've been dealing with that situation actually not just for last year, for the last few years. So we feel comfortable With our product portfolio, more importantly, with our investment in technology, we can actually compete effectively.
So competition situation is now is, I would say, normal state stand. But overall, I guess, our Capability to compete effectively is getting very embedded. That's our view.
Okay. Understood. My last question is for your 4 gs SoC shipment,
How do you compare with last year? Is the
4 gs SoC shipment to increase this year?
I think for 4 gs overall, from a shipment perspective, consider 4 gs globally is coming down, our market share probably is up a little bit. I think for 4 gs, we're looking for shipment wise, it's another year of flattish.
Flattish? Then how about the ASP, the price and margin for the 4 gs?
I think ASP probably will flattish coming down a little bit because every year is actually I think there was some pricing pressure on
the 4 gs side.
So it will be flattish just slightly down.
Okay. Understood. It's helpful. Thank you.
And right now, we're having Randy Abrams from Credit Suisse. Go ahead, please.
Okay. Yes. Thank you and good results. I wanted to follow-up a question on the share gains you were discussing in mobile. Could you talk just the 2 areas?
I think 1, the high end, how you're seeing your market share trend if you see continued gains? And then also the sugar gain as the market moves down into the mainstream. And if you could talk to your recent 1100 and 1200 Dimensity that just launched, How you see it stacking up if it's up to the level of Qualcomm's Snapdragon 800 tier and you're starting to get more design wins into that flagship
Okay, Randy. Dimensity 1200 is our current Well, I should say best performing SoV. The comparison to our competitors, Chip, I think, actually is quite available probably in all the different websites. We are confident that we are very competitive to the ones that is with similar for comparable price match 800 series SoC. We have also good confidence that there will be Good design, good sockets for the Dimensity 1200 in this year.
And of course, I think the revenue will start maybe in the Q1 this year and, of course, continuing to throughout the year and beyond. We are actually quite comfortable with the progress we're making in this segment. With our continued investment in our higher end SoCs or the IPs and leading edge process technology. We will continue to produce better and better higher end SOF's in the coming Quarter.
Okay. And a follow-up to that and then I'll ask a second question. For the process where you're on 6 nanometer, how aggressive your plan to get an upgrade moving to 5 if some of your mobile product lines may start moving later this year or you may make a big push next year? That's a kind of follow-up to that question.
We are the 5 nanometer design the 5 nanometer design, the 5 nanometer So we are pushing full speed.
Okay, great. If I could ask on the seasonality, Q1 being a bit of a growth quarter. Can you clarify that across all three segments where you're seeing sequential growth? And then as you look at the full year profile, some of the non mobile is some of it you could say Is more stay at home related on some of those product lines. How you're seeing the profile, because you talked about share gains.
If you still expect off of this kind of strong first quarter still good kind of seasonal ramp through the year on more of the mature and growth product areas.
Randy, I think for Q1, the guidance we've got basically 0% to 8% growth, just we just are seasonal strong. If we dive into the 3 major product lines, I think for the mobile product is the one with the strongest growth, I mean, mainly due to the global and also due to the 5 gs product cycle. For the growth area, I would say, it's also strong as well, but relatively Speaking is not as strong as the mobile device, but for the smart home, basically, they will also have a normal seasonal pattern. I think that's the situation for the 3 major business lines.
Okay. And maybe if you can say the high base, your expectation, like seasonally usually off both. Q1, it's, you're growing into Q2, but do you expect any different pattern or given the demand strength and share, It still looks like a pretty good even off the higher level.
I think for Q2, again, maybe a little bit too early for about Q2, but overall, I feel like the CEO, like I said, for the full year, we're looking still looking for a solid growth year. So for Q2, even based on a high level of Q1, again, I don't think the guidance is still too early to give our guidance, but we still feel there's a pretty good chance we'll still
Okay. And the last question I had just on the Circling back to the inventory and supply constraints, your own inventory is still a bit below target level. How are you seeing ability to build back up or do you expect to kind of stay in these lower levels? And you talked about there is supply constraint. Is there a way to think about how much it's limiting shipment or ability to deliver to orders?
Like if there's a magnitude kind of you're falling short of meeting the demand at this stage?
I think David said, I think, farewell earlier that well, during this very Constrained time, customer certainly will do booking from different their suppliers. This is quite understandable and we are prepared for that. On the other hand, the constraint also limited our ability to meet a customer's demand fully.
Also,
the question is really our shipments will Build a big inventory in a very short time in customers' channels or not. As David said earlier, Certainly, in the Q1, we don't see that. How that it all depends on the sales tool, of course. So we watch this every actually just for every week of customers' sell through. We feel right now the lower level of the Inventory probably will last for another quarter, we believe.
Beyond that, the visibility, of course, is But the supply constraint situation, we believe, will continue.
Okay. Great. Thanks a lot Rick and David.
Next in line, Laura Chen, KJI. You're on now, Laura. Hello, Laura, are you with us?
Hi. Can you hear me? Sorry. Okay.
We can hear you now. All right. Go ahead, please.
Yes. So also on the supply I just wondering that how would you prioritize your product timeline given the tight supply in the upstream side? That will give us more like a prioritized higher ASP product. Thus, we may have better margin looking forward?
Laurence, a complex question. We have several considerations. I'm sure I will not be able to answer your question directly, but several considerations. 1 is the strategic market position. As we said earlier, both David and I, that this year, we are definitely aiming for expanding our time and expanding our market share in in our target strategic areas.
That's definitely a major consideration. 2nd consideration certainly to optimize the revenue and the profitability. The third consideration, of course, is still the customer relations. So I cannot give you A simple answer, but this is what we do just about
every 2 weeks.
Okay. Yes. And another question is regarding your recent M and A. I I know that you got a few M and A case last year. Can you elaborate more down MediaTek's Strategy in the networking space, how that impacts our business in the longer term?
And maybe any growth targeting this field?
Okay. The Intel Imperial acquisition Basically, it's a power IC fitting The high end FPGA application, especially in the hyperscale data center in the areas. This is an area that our Current power IC business does not have. It It really fits our current profile. It complements our current profile almost perfectly.
So we went aggressively for it. We have high expectation. Of course, after the closure of the transaction, We have high expectation that this business and the talent will fit well into our current Strongly growing power IC business.
So we are as
I said, we have cycles.
Okay. Will it not also like a group into our growth business? And how would that Impact our maybe potential ASIC business or other application in the networking space?
Laura, I think there should be no impact. It's really just a different line of business. If there's any, I think there's a complementary. So the PMI, especially the high end PMI, we talked about through this acquisition, we're going to get into the data center, the cloud infrastructures. And we also have a long line of asset businesses working on the same space, but it basically provides different product line.
But right now, actually, We have some synergy and also complementary for this line for basically the customer. But in terms of product, It really is no impact no net impact we decide, which will be more synergies.
Okay. Thank you.
All right. Ladies and gentlemen, unfortunately, we are lacking time. So we are going to take the last quarter. The last one to ask question is Brett Simpson from Arete. Go ahead please.
Yes. Thanks very much. And Rick, I had a question about MediaTek's Computing strategy, we're seeing ARM CPU starting to make headway in consumer compute. So Apple with a Mac going on and I think Qualcomm recently has acquired NUVIA. And you're making headway encouraging headway in Chromebook.
So I just wanted to ask, how do you see MediaTek's position evolving here over the medium term. Do you plan to fully support Windows? We hear a lot about China Linux Launches this year, very similar to specs with Chromebook that we pour onto your platform. So I'm just wondering how you see this, Particularly in China, is there scope to build partnerships around in China around consumer compute based on ARM? And how should we think medium term about the overall strategy?
Thank you.
We are we have invested over the years heavily in Xeon based
CPU capability.
And as you said, we have also made inroads in the different segments. We are it is our intention actually more than intention. It's really our one of our objectives to expand our penetration into the into all the same, which is available for the ARM based CPUs. Chromebook just being a good example. Whether a window based, I think That is probably not something we will engage anytime soon simply because of
the huge investment required for the Windows.
But We also believe strongly that ARM based CPU has a really bright future in the computing arena. And the media tech certainly will play important and I hope a very profitable role in that area.
Great. And maybe just a question for David. David, can you clarify how much of the OpEx in Q4 went to cash stock bonus. And also can you maybe just lay out the dividend policy now that your EPS is Climbing quite sharply. Are you going to stick with the same dividend policy?
I think it's about 70% of EPS. Is that still the plan going forward? Thanks very much.
Okay. I think for Q4 last year, the overall the cash bonus is roughly NT38 1,000,000 NT dollars. So NT3.7 billion dollars.
Okay. And on the dividend?
I'm sorry, what?
With as a profit
as basically the cash policy. For the quarter.
Okay, super. And then dividend, how should we think about dividend policy going forward?
I think given the policies, we haven't actually finalized with our call yet. Normally, we won't finalize until maybe sometime late March or early April. But generally, if you look at our recent past in the last few years, I think the payout ratio is roughly in the range of 70%. This year, I think, in Generally, we will be maintaining this at least maintaining this, but into the final numbers, please bear with us until we actually have the final word with our Board.
Okay. And maybe just one final one for Rick. You mentioned in your prepared remarks, millimeter wave is something that MediaTek is going to be supporting. I think you talked about commercializing in 2022. Just love to get your perspective on how you see The millimeter wave support, do you think this is going to be a mainstream technology over the next couple of years and something that we may see in China in due course.
Okay. On mediumwave technology, I think It all really depends on your definition of mainstream, but it doesn't really matter because MediaTek is committed to deliver Minuver Wave Technology and SoC 2021, 2022 for revenues. We believe This is one area that we will be just we will not be absent. As to China's market, it's still I think it's pretty cloudy. We cannot tell clearly whether The Chinese will launch major millimeter wave applications anytime soon.
But That does not really change our call from that point of view.
Great. And maybe one final one for David on gross margins. There's a lot of questions about The gross margin and the business, but I wanted to hone in on the mobile computing division because we've seen obviously a lot of change with The transition from 4 gs to 5 gs, there's more tablet and compute this year. And I just wanted to understand how the gross margin is progressing in this specific area. Are we seeing Progress in gross margin in 2021 in mobile specifically and how close are we to corporate average gross margin in mobile?
Thank you.
Well, I think assume right now, even though it's a gap, I think the gap is really mild, very small. Because otherwise, you wouldn't When we see the huge revenue ramp on the smartphone side, even if there's a big gap between the corporate average versus the smartphone gross margin average, You should see a gross margin actually coming down substantially. But right now actually while we are expanding our revenue contribution from SMARTO And spending is aggressively free on all different addressable market. We're still maintaining that. So you can assume that the gap actually is pretty minimal.
Great. Thank you.
Okay. Ladies and gentlemen, we thank you for all your questions. Now I'm handing it over to Ms. Jessie Wang for closing comments. Ms.
Wang, please proceed.
Ladies and gentlemen, this concludes MediaTek in the Q4 conference call. We would like to thank you for your participation and you may now disconnect. Thank you.
Thank you, Jeffrey, and we thank you for your participation in today's conference. You may now disconnect.