Welcome to the MediaTech 2020 Second Quarter Investors Conference Call. Financial Results and Presentations for today's call are available on the Investors section, a company website, at www.mediatech.com. Now I would like to turn the call over to Ms. Jessie Wang, the Deputy Director of Investor Relations. Ms.
Wang, please go ahead.
Good afternoon, everyone. Joining us today are Doctor. Rick Tyme, Mediatek's CEO and Mr. David Gucci, Mediatek's CFO. Mr.
Guil will report our 2nd quarter results and then Doctor. Tai 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 subject to various risks and factors, which may cause actual results to materially differ from these statements.
The presentation materials supplement on financial measures. Earnings distribution will be made in accordance with financial statements based on T1s. For details, please refer to the safe harbor statement in our presentation slides. In addition, all content provided in this teleconference are for your reference only not intended for investment advice neither media tech nor any of independent providers is responsible for any actions taken in reliance on contents provided in today's call. Now I would like to turn the call to our CFO, Mr.
David Good for the second quarter financial results.
Thank you, Jesse, and good afternoon, everyone. Now let's start with the 2020 second quarter financial results. The currency here is in NT dollar. Revenue for the quarter was $67,600,000,000. Up to 11.1% sequentially and up 9.8% year over year.
Gross margin of the quarter was 43.5 percent, up 0.4 percentage points sequentially and up 1.6 percentage points year over year. Operating expense for the quarter were $22,000,000,000 compared with $20,400,000,000 in the previous quarter and $19,600,000,000 in the same period last year. Operating income for the quarter was $7,400,000,000, up 27.8% sequentially and up 20.7% year over year. Non key first operating income for the quarter was $8,000,000,000. Operating margin for the quarter was 11%, increased 1.5 percentage point from the previous quarter and increased 1 percentage point from the year ago quarter.
Non differs operating margin for the quarter was 11.9 percent. Net income for the quarter was 7,300,000,000 up 25.9% sequentially and up 12.4% year over year. Non differs net income for the quarter was $7,800,000,000. Net margin for the quarter was 10.8% increased 1.3 percentage points from the previous quarter and increased 0.2 percentage points from the year ago quarter. Non deferred net profit margin for the quarter was 11.6%.
EPS for the quarter was 4.58 and D dollar, up from $3.64 in the previous quarter and up from $4.11 in the same quarter last year. Nonkey first EPS for the quarter was $4.92. A reconciliation table for our key first and non key first financial measure is attached in our press release for your information. And that concludes my comments. Thank you.
Thank you, David. And now I would like to turn the call to CEO, Doctor. Rick Tai for prepared remarks.
Good afternoon, everyone. Today, I'm pleased to report our solid 2nd quarter results. Revenue came in above expectations and operating profit margin increased to 11%. The highest level since the fourth quarter of 2015. In addition, our operation income in the first half of the year grew more than 40% year over On the business side, we saw healthy demand across multiple markets during the second quarter.
Especially lows in our growth area. Now let me elaborate on our 3 businesses. For our second quarter results. Starting with growth area today, which consists of A IOD, PMIC and ASIC. Accounted for 28% to 33% of 2nd quarter revenue with our exposure to multiple growing trends Gross area remains robust during this challenging time.
Revenues for this group were better than expected in the second quarter, especially WiFi and power PC, power IC. 1st of all, Increasing bandwidth demand in this new environment demands a new era of ultrafast connectivity. This is driving our Wi Fi business upward. MediaTech is one of the few industry leaders shipping Wi Fi Six Chips with large volume in the 1st year of the market take off. By now, MediaTek WiFi sit solutions are already in a wide range of applications across broadband, router and consumer electronics.
We believe this is just the beginning of a multiyear connectivity upgrade cycle. Work from home and remote learning trends create near term momentum for router upgrades. Mainland China's Tianjin Pong infrastructure investment further accelerate YX6 adoption in broadband. We target to ship several millions of Wi Fi Six two sets this year and believe its contribution will continue to increase in coming years. Power Management IVs was another product with robust growth in the 2nd quarter.
Driven by notebooks, Chromebooks and 5G base stations. Looking into the second half of twenty twenty, apart from healthy PC and 5G base station demand, we are seeing growing contribution from 5G smartphones fast charging solutions and gaming consoles. For ASIC, consumer ASIC chip for gaming condos have started multiyear product cycle. Demand is strong in 3rdquarter ahead of the year end holiday season. On the enterprise side, our cloud AI project is on track to commence volume production in the second half of twenty twenty.
In addition, we recently announced our first Retirement 5 product, a companionship our switch ASIC for data center and 5g Infrastructure. The product extension would add our platform competitiveness in enterprise market. Next, SmartHome and others primarily TV and other traditional consumer electronics. Accounted for 20 to 25 percent of revenue in the 2nd quarter. After a slowdown in the 2nd quarter, Global TV demand rebounds rapidly in the third quarter, mainly led by North American and European markets.
As the main home entertainment device, TV, especially smaller size ones for bedroom, are becoming popular during the longer staying at home periods. Other traditional consumer electronics also recovers gradually. Now on to mobile computing, which includes smartphone and tablet accounted for 43% to 48% of the 2nd quarter revenue. Mobile computing grew strongly in the second quarter, driven by numerous 5G smartphone launches, and demand search in Tablets and Chromebook for remote learning. We expect those momentum to carry on into third quarter.
The 5G market is tracking well, We continue to believe the global 5G smartphone shipment in 2020 will be 170,000,000 more likely towards the high end. It will likely to be more than double in 2021. Media effect is well positioned in global 5G cycle. With the recent introduction of Diamensity 7 20 for the mass market, MediaTek has covered all smartphone segments in just three quarters, including high end diversity 1000 in the fourth quarter of 2019, and mid range diversity 800 series in the second quarter this year. SoCs are highly valued by our customers.
All major Chinese smartphone brands are shipping media tech powered 5g Smartphones by now. And there is a strong decline in pipeline for models in second half of 2020. Very importantly, our 5G smartphone shipments to regions beyond Mainland China will start in the third quarter. Besides our 5G single modem business is progressing well, First project for Intel Platform notebook PC is on schedule to mass produce in the first half of 2021. On the technology side, MediaTax Lease Industry in supporting 5G dual SIM, dual standby and 2 carrier aggregation.
With excellent power performance for mid to high end smartphones. Those features further enhance Mediatex already highly competitive position in the increasingly popular sub-six gigahertz market. The power from subsets gigahertz. Millimeter wave product development is on schedule. We expect EMEA wave technology to be ready by the end of the year and customer samples to be available in 2021.
For 4G market demand stays stable lately with market share gains we believe we are able our total revenue grew more than will be considerably stronger in the second half. In most of our businesses, with our diversified product portfolio and continuous investment in technology. 2020 not only provides healthy top line and bottom line growth, but also lays out a sluggish foundation for our midterm growth. In particular technology investment efforts we made in the past few years are starting to bear fruits evidenced by our early participation and stronger market position in both global 5G and Wi Fi Six markets. We are seeing great opportunities ahead with business progressing well on multiple fronts.
As always, we will continue to execute and explore future market potential. Now, turn to 3rd quarter outlook. Consumer electronics demand is picking up across the board. Work from home related demand and several customer product launches such as 5g Smartphones and game consoles as sales momentum into the third quarter. We expect or major product line to grow strongly.
5g's smartphones in particular will benefit from mass market models launches and ramp throughout the year. Gross margin is expected to be stable at the current range. We expect third quarter revenue to be in the range of NT82.5000000000 to NT87.9000000000 up 22% to 30% sequentially and up 23 percent to 31% year over year at a forecasted exchange rate of $29.2 to US1 dollars. We are forecasting gross margin at 40 3percentplusor-1.5percentagepoints. And quarterly operating expense ratio to be at 29percentplusor-2percentagepoints.
With that, we expect to see another quarter of healthy operating leverage in the third quarter. That concludes my prepared remarks. Thank you.
Yes, thank you. Please press 1 on your telephone keypad and please ask questions after your name is announced. To answer your questions, just press 2. And as a reminder, it is greatly appreciated that you turn off the speaker phone mode of your device. You.
First to ask questions, Randy Abrams, Credit Suisse. Please ask a question.
Okay. Yes. Thank you and congratulations on the good result and outlook. Actually the first question on the outlook with the 22% to 30% growth, could you outline it by segment, the relative momentum And could you also indicate if you're seeing any incremental benefit already from some of the restrictions where you have opportunity to support that customer if they can't get their own silicon?
With the third quarter, actually, all the businesses are growing well. Actually, I explained to India remarks In all our business, we see a good robust growth. And we are very pleased with that. And, we are and this is, despite really, shall we say, outside impact. These results, we we are actually we have been forecasting internally through the past quarter already.
Thank you.
Yes, and if I could follow maybe just beyond that, if you see potential looking past because it's well above seasonal third quarter. The initial view looking past, if you could start to see some benefit and also 5G ramping up if even though we're seeing a better seasonal, the growth could actually continue into year end, just factoring 5G ramp and any potential new customer new projects from the restriction?
It's not winning.
Wendy, it's Dave here. I think the 5G is the CEO explained, it's definitely above the growth driver. But I think the key for our 3rd quarter revenue is really just we see a pretty even and all pretty strong growth across all three sector, which is basically a mobile computing, the growth sector and also the small homes as well. But as we explained earlier, 5G is definitely one the growth driver.
Okay. I guess what I was asking is more for the follow on 4th quarter, like it's well above seasonal and good strong growth but then that's even before probably much benefit from incremental. So if the system company can't get their own silicon, so I was just curious if you have potential, it looks like the strength continues into year end, factoring you could have further share gain and further 5G ramp.
I think the fourth quarter, we probably is, we need to wait until maybe for next quarter. In general, I guess, to answer your questions, we do see a pretty even demand coming out from all three major business sectors. For mobile computing, especially, I guess, both for 5G and 4G, we see a 5G definitely very strong, as we explained earlier, we now further expand our product segmentation into the mainstream and also the entry level as well. That's what will help. By saying that, I mean, towards the year end, also we have the new high end product coming out as well.
So it's truly the best way to think about that is really comprehensive product segmentation expansion, not just on the mainstream. And for 4G, this year, even though overall market is actually coming down, but many thanks to the market share gain, we see a pretty decent growth as well for this year.
Okay. And the last question, if I could ask on the data center business, if you could give an updated profile between the AI, the data center switch and now this new product you've announced. How has these ramp up? You could see the revenue contribution like as it goes toward low single or if it could get to be mid single, and maybe just the outlook for this segment, if you're kind of sizing up the TAM again, how you see the potential in data center?
Well, you're asking data center in particular. I think data center is a 10 is about half a 1,000,000,000, but we're we are, working in what we call enterprise ASIC area, which comprised of datacenter network and infrastructure, 5g Infrastructure altogether about 2,000,000,000 in 10. Right now, we have a good designing and we're, we have tape out. We have engineering samples. The production is beginning to ramp up this year, but this business model takes time to, to develop into a major revenue as a major revenue for So we're being patient and we're putting in still the resources into the process technology, the key ITs such as the high speed service I believe we're going to win multiple denying and we will provide a solid stable revenue in the next couple of years.
Thank you.
Next we're having Gokul Hadi Harang from JP Morgan. Go ahead please.
Hi. Congrats on the great results. First question I had, could you talk a little bit about, I think you did revise up your 5G stations and you're also expecting more than 2x growth in 2021. How should we think about, media backed 5g Markets share as we are now getting into mainstream as well as probably a little bit more entry level enterprise points for 5G bus market phone.
What are we thinking about market share situations
for 5G? And secondly, how should we think about pricing of 5G. Now that we have a little bit more visibility, I think previously you had said until the end of this year, you're seeing that the roughly 2x or more premium that you have to 4G with a little bit sustained. Could we talk a little bit longer term? Is 5G pricing still going to remain?
On a like for like basis as a significant premium to Fotis as we look into next year more large market models as well? Thank you.
It's a long question. Let me see if I, get your point. First, I think 5G performance in market up to now is pretty good. I think all of our 3, SOCs in 3 different assessments of being delining well with our various customers. We expect the I think you asked the market share.
Let me see. We believe we probably quantity wise above 40% by the end of the year, about 40% of the market share, quantity wise. And what else?
I hope
I'm answering your question.
Yes, Alex, that's good. Do we think that the 40 plus percent market share pertains into next year also? And maybe could you talk a little bit about 5G pricing versus 4G on the same segment? Are we going seeing the price premium that we currently enjoy, how long can you sustain the price premium?
I think into 2021, of course, we still, this looks quite a bit of time to see, but we should be able to hold on to our market share. Hopefully, we can do better. Pricing wise, I think we have, elaborated before FIG SoCs being a quite a bit more complicated than 4G SoCs. Does command,
how much? We're talking about multiple times.
Multiple times of 4 GSOC price. That trend definitely is continuing. Thank you.
Okay. Thank you. Now we're taking questions from Sebastian Ho, CLSA.
Hi, good afternoon. Thank you gentlemen for taking my questions. My first question is, the product roadmap for next year. So I know that we already have the MSTA 1000, is it for the high end 5G SOC in the high end model for your customers. But can you give us some update on your plan about the next year?
Whether or not we will have a more high end one for the Ultra Premium fraction model for our customers. And when do you expect that to come in and what kind of the process no technology would you utilize? Thank you.
We announced a diversity 1000 ship near the end of last year. So I think 1 year is about the time that we will take to make our announcement for our next high end SOC. The name to be decided. Of course, we will, as we said, as almost the very beginning of the 5G era, we we we definitely want to be in all segments from high end to mid end to the, mass, volume, segment. We continue to, to abide by that statement.
So for the I'm sure we will have more high end SOP after the announcement at the end of this year. And for the high end ship we basically will we were using TSMC's leading edge processes I think we are, We use 7 nanometer for the 1000. We'll continue to use 7 nanometer and 6 nanometer for the next couple of chips, but we will move into Vitamin as soon as we can. Thank you.
Got it. That's clear. My second question is, I think the maybe this is for David, I think the I think we have heard you guys to talk about emphasizing the operating leverage for long time and you've done a good job to direct investors, you not focused not on gross margin, but on op margin. Since now we are in the very good position in the upcycle and the 5G still profit accretive. And the growth business also very profitable.
When do you expect that we could reach the 20 return to 20 percent OP margin again? Is that a a dream or is that achievable target in the next 3 years? Thank you.
For the longer term forecast, we probably will not be able to come right now. But as you can see, Sebastian's starting from Q1 this year, I think the Q1 operating margin was 9.5% in to was 11, Q3 definitely we're going to continue to see that improving. And as we explained to the community, up in leveraging is something that we're driving pretty seriously. I think trend wise, I think we feel comfortable, but in terms of pace and also magnitude, I think that would be still need to watch lots of different pieces putting together. I guess we probably will not be recommending on that.
We don't have the visibility to make a long story short. But I mean churn wise, direction wise, I think that's the direction we're working on, diligence.
Got it. Last for me, a quick one is I think that we continue to accumulate a lot of the cash in hand. I know that we continue to be very due to a lot of strategic inventory investment, but what about the cash return to shareholder strategies? Would you consider increased potentially increase the dividend or any other sort of the cash return policy?
I think in the past few years, the overall dividends or cash dividend payout ratio is roughly close to 70%. I think that was defined by the board. I think every year, we will definitely discuss with our board and decide the dividend policy, but for the type being, the overall policy is still trying to maintain a balanced and stable payout ratio. So basically the EPS, the early increase, I think the absolute dollar will increase But in terms of the payout ratio, I think, we need to discuss with our board later this year or early next year in order to get back to your question. But although, I guess, if you look at the dollar side, we pay out every year to the shareholders, I think it's actually pretty sizable, pretty sizable.
Got it.
Next to ask questions. Roland Xu from Citigroup. Go ahead please.
Hi, good afternoon and congrats for very So look at your mobile revenue, have been increased meaningfully YY in first half. We'd like to know, how much this 5G contribute to your mobile revenue in first half.
I think, Roland, I think for the first half, the 5G's, contribute, I would say, less than 10% of the overall revenue, if you consider the Q1s, Q2 for the whole company perspective.
Okay. Less than 10% for the whole company?
Yes, I was close to 10%
The whole company for the whole mobile revenue?
A whole company, whole company.
Okay. Less than 10% of the whole company. And also for your 4G, you said you continue to grow 4G market share. So for what kind of the product or segment are you are growing, are you a market share? Is this from the CV P1890 or G90 or at least your market share gain is coming from a low end product?
Rona, I would say, we're doing well across the board from gene IT all the way to Excuse me. I forgot the the numbers, but basically across the board, we're I think we're getting good design. And the, and those designs will continue into 2021 also. So we remain, I would say, comfortable with our 4G business this year and we expect still a 4G As we said also before, it's a long lasting, it's a long lasting tail. We believe in the next next couple of 3 years.
And we intend to continue our market share performance and the that will also provide us with really good revenue and the operating profits.
Thank you. And last time you said you have 4G total shipment this year.
1.3000000000. Roughly units a year, even with 5G penetration, we still see strong demand for 4G, especially outside of China, Mainland China, that I think that that will be this trend will be somewhat different from the 3 era. Thank you.
Thank you. Yes. And for your 5G shipment, the whole whole year, you remember $170,000,000 to $200,000,000 are still unchanged. How about for the shipment in China think last time, you talked about $100,000,000 to $110,000,000 year. And I think in your opening remarks, to tell you did not mention this.
So what's your view for the shipment in China this year?
$100,000,000 to $120,000,000. $120,000,000 to $120,000,000.
Yes. But, when we look at the China 5g penetration in 2nd quarter had reached to close to 50% even in June, it was more than 60%. So is this a high penetration in China in your number of 100,000,000 to 100 and 20,000,000 shipment. Are you seeing all your number actually is looking for even higher penetration in in China this year?
I think If I remember correctly, the first half China's 5G smartphone shipment fell through was $40,000,000 plus. I forgot the exact number, $42,000,000 or something. No, that's what happened. I'm talking about first half.
Yeah. Okay. Yeah.
Yeah. First half. So we're looking at, so for 100,000,000 to 120,000,000 which will represent $60,000,000 to $80,000,000 kind of up to double the first half numbers. We feel that's a reasonable forecast from our view.
Okay. Yes. So, still stick with your view. By the way, actually, I believe in 2nd quarter, China 5G Smart Machine is close to 50,000,005 0 and then plus the first quarter, I think that probably first half is already above $16,000,000. Yes.
So
I think, Nona, you need to look at the there's a sale in and sale out. We're talking about sale out. There's about 10,000,000 difference in sell in and sell out.
Okay. So your number is a sell out number, right?
Sell out.
And probably because to the high end.
Rob, I think first half is higher and also the mainstream as well.
Okay. Understood. Okay. Thank you. My last question is now you are seeing an increasing demand on both 5G and the 4G SOC.
Do you get enough support from your foundry and OSAT partners to make offers products to meet this increasing demand? Thank you.
Let me put this. We work very hard and, but also very closely, we saw foundry supplier. We're getting, support from leading edge processes to 8 inches mature processes and fabs. So, all that, I don't see, major issues. But we're it's taking a lot of effort, but we're making our, commitment to our customers.
Okay. So how do you think about the foundries pricing trend? Will it be a headwind to your gross margin going forward?
We don't see issues for this year. We figure out next year.
Thank you.
Next, we're taking questions from Charlie Chan from Morgan Stanley.
Thanks. Hi, Rick. Hi, David. So my first question is about your gross margin trend because I remember you talked about 5g Margins should be better than 4g and your TV, I thought you mentioned seems to be increasing. So why do you think gross margin in the quarter is only flat.
Do you see any upside there?
Charlie stated here. I think for the gross margin basis, every quarter, we really need to see the mix between the business units and also the product mix. And also the customer mix. So probably the better way to think about the gross margin is really just, like we say earlier this year, the gross was stabilized within the range, basically back to when the range we provided was 42% to 43%. Now you know, consider everything, for Q2, it was 43.5%.
And for Q3, the guidance will give out was 43% plus -1.5%. I guess, we still believe, while we trying to ramp our 5G and also basically the also 4G as well. The overall smartphone revenue contribution will be higher in Q3 and Q4. But at least we still believe we can stabilize the gross margins within that range.
Okay. Thank you. Am I Thank you. My next question is about how you are going to manage this U. S.
Policy risk. It is great to see Mr. Patrick Wilson join the management team. So what's the intelligence from the gentleman or from your team about whether your competitor will get a license or high silicon or to get the approval to sell their merchant merchant ships to Huawei. Because I think there's an important assumption for your 5G SLC market share in 2021.
Can you give us some color? Thank you.
We did announce, having, Patrick, as our VP of government affairs in the U. S. Are mainly because MetaPack being, I would say, a very important and also a global Semiconductor company. We need to be able to participate And if needed influence in the dialogue, and the discussion among a major semiconductor companies. And, Mr.
Wilson, will be stationed in the in Washington, D. C. Will lead the effort locally. I'm sure you understand how that works. And so far, we have really good even just within a week, we have good, really experience with Patrick But the question you asked, I think it's beyond his job description.
We, our main purpose is really to begin to help MediaTek participate in the discussion and to influence if necessary for the, a big part of the industry. And I'm sure Patrick will also establish media types of presence in a very positive way. Thank you.
Got it. And so with those kind of assumption, are you confident that you're market share, in 5 days, I mean, I mean, your market share in China can exceed that 50% in 2021?
The chart will probably will not be able to come in teams from year's market share right now. Yes. It was some time ago.
Okay. And quick one, you said, the end demand, right? I mean, you know, coming in, you said that consumer demand is recovering, But if you look at pandemic outside of China, I think it's still pretty tough. So I said the company is a strong performer. What's your observation about smartphone demand outside of China, especially India or African markets?
And whether that could be a potential risk for your second half outlook? Thank you.
Charlie, to the smartphones, we are not I don't think we're being naive about the demand. The overall demand picture we have set and we remain that way that the global smartphone, unit shipment will decline by 10% to 15%. And most of which of course will fall on 4 gs smartphone. However, And we also said we have gained market share in a significant way. So our shipment in the 4G remains about the same, hopefully a little better than last year.
And 5G is at the beginning, you know that. We are participating. The critical thing really is the out of our investment and our determination in our technology and product portfolio and our execution. We have demonstrated that to our customers to most of our key customers that we can provide them with the portfolio products with the right technologies content that can make them successful in the market. So we're getting the design and we're getting our share of the business.
So that's how it works. We're not overlooking the potential impact, average impact from the pandemic at all. Okay, thanks.
Next one, we are having, Bruce Lu from Goldman Sachs. Go ahead,
Hi, thank you for taking my question. A very good result in guidance. So I want to take in more a little bit about our approach penetration, we will remain high for over the right multiple years. I think as mentioned, the 5G streamer will be more in double next year. I.
E. The penetration where we will be close to 40%. And if 4G is going to be like high penetration even in 2022, 2023, which means that the growth rate for 5G will be much, much slower in 2022 onwards. Is that a way to think about it?
Hello.
Hey Bruce, I think maybe we will not clear about that. I think when we talk about the 4G would mainly point out for this year. But for going forward for next year, like the CEO explained, the overall demand on 5 gs out of your next year 5 g shipments. Not shipment, but the 5 gs may, it should be double, which means the 4 gs overall shipment from a just for market perspective, it will come down the overall, just from the ASP profile perspective, as long as we can, remain on the meaningful market for 5G, that's actually change for good is we call the market product migration for relevant, you know, cannibalization. So we talked about 4G fully for this for next year, it really depends on the 4G 5G product mix.
So we're generally referring to 4G next year. The shipment will continue growth on the MediaTek side. That's not what we're referring to.
No, no, no, I'm not talking about MediaTek's 4G smartphone shipment next year. With, I thought that management was talking about 4g penetration or 4g overall market was, will remain at higher or relative high penetration rate in market years?
Yeah. It's a, I think, Bruce, it's a long tail business and also 4g, because as you can see, in the past, we still have, you know, a little bit 2g and those the 3G smartphone. But now we will see less and less 2G and 3G smartphone where we see a lot of 4G smartphone. And also starting from this year, we see 5G smartphone. So talk about 4G as a long tail business.
We do believe going forward, lots of people from the emerging market will stay at 4G. But for a certain area, we're migrating to 5G. So that's what we mean by the 4G penetration will continue to increase.
I think
the key question I'll try to ask is that, you know, Mingata is going to reach about RMB10 billion revenue pretty, pretty soon. I mean, beyond that, what is the main growth driver investor, where is the big enough addressable market or the key growth driver, which can move the whole market? The company has extremely exposure to smartphone in the coming years. I think most likely once China 5G smartphone shipment penetration reached the saturation point, your smartphone revenue can be more than 60%, 70% of its total revenue. And your revenue exposure to China is extremely high.
At that moment. So what kind of product or what kinds of customer revenue exposure or the growth we can expect in a multiyear timeframe? And what's your intention to do more aggressive M and A for like different custom profile or different product line at the investor, something I'll try to ask?
This is Bruce Oh, people there, this is a very dynamic time. The 5G certainly, I think we'll provide a strong growth outlook for several years to come. And the media attack as you probably can tell, it's being a well, we're taking advantage of that growth by being early in the cycle. However, the other things, we have talked about multiple times is this time, at this cycle, we are not just focusing on 5G smartphone in China only. I think I said in my remarks that the starting third quarter, we will start shipping 5G smartphone to market outside of China.
We are working very hard to have delighting into the markets such as the North America, Europe, next year later for later this year and next year beyond. In addition, we also put a lot of work in the what do we call were the first being the data car with Intel. Intel Chips powered notebook PCs. We also are working on the CPE using our SIM modem capability. We believe this will provide definitely extra and the stable business for our modem development effort and invest And of course, we are not just sitting here, working on 5G modem, we are our business in our growth area has done well.
Has been doing well. We'll continue doing well. And this year, as we set during our second quarter or 3rd quarter business, the growth area is doing from growth rate point of view is doing very well. We are our Wi Fi business, our business into the tablet and the Chromebooks are really, we are very pleased with the advancement where we're making over there. We definitely expect because this pen, this new normal.
I don't know what that is, really. But one thing we're sure is people either at home or in the office will demand much better equipment from computing and from connectivity point view and not to mention the good display. And these all fit into media have strength. We have been investing in these technologies all along. We have the products to meet this surging demand.
We continue. We believe we will continue to benefit because this I think this trend is a continuing trend. It's not a one time, a short term type of thing. So, yeah, we're we understand the situation that we are growing well this year moving into a good revenue, strong revenue this year. We're working hard so that we can continue hopefully our growth trend in the next couple of 3 years.
Thank you.
Next we'll take questions from Brett Simpson, Airtier Research.
Yes, thanks very much. A question for Rick.
I think you touched on some
of it earlier, but the foundry situation at the moment is incredibly tight. Particularly at 7 nanometer, particularly for PMICs at the moment. Are you seeing any real challenges delivering sort of upside in Q3 from a supply perspective. And when you look out to Q4, will there be access to more supply? Will you be able to to ramp up further or is there going to be some challenges also in Q4 with tightness out there?
Thank you.
Oh, you know, it's tight. I said earlier, both, from a leading edge CD hedge process and the 8 inch, mature processes. Again, we have seen we did see this earlier and since I think late last year, we started to work on the epidemic capacity, for instance, we move our products into different fabs from our various suppliers. I don't want to tell you how many fabs we're in quite a few. Quite a few.
And that's how we manage to meet the requirements of our 5G shipments, our 4 g shipments, our tablet, shipment, our Chromebook shipments. It's a very tough situation, but the our supply chain guys have done a tremendous job in the, meeting the customers demand. Leading Edge, we worked really closely with our neighbor here, both from technology point of view and the capacity support point of view. This we we, I think a media attack, very different from several years ago, we are now moving into a leading edge processes as fast as we can. Because we want to take advantage of the benefits from those processes for our leading high end product.
Thank you.
Thanks. And maybe just a follow-up. On 5G this year, you're not raising the market outlook, but it's clear that you're seeing a much bigger volume ramp in 5G than you initially expected. So I'm just wondering what sort of market share do you see this year for MediaTech in 5G, global 5G? Could you achieve a 25 percent 5G global share in 2020?
Well, Ross, calculation probably 20% and better. Globally,
including
all suppliers,
Okay. And just one other point, you mentioned about millimeter wave and your your plans to sample. I think Qualcomm said on their earnings call this week that they expect something like 120 operators to launch millimeter wave next year and some color on China as well. So I'm wondering, when do you expect to have Millimeter wave commercially shipping? And will the RF partners that you work with will they be able to support your timeline?
Thank you.
Our technology, we're working very hard on immediately with technology. We will I will be able to announce some of our results by the end of the year, this year. We will we'll be able to supply samples to our customers sometime next year. So I think If you look at the speed of the acceptance of the different spectrum and substitute gigahertz or millimeter wave, we will be able to I think meet most of our customers requirements in the next couple of years.
Okay, thanks. And maybe one sort of strategic question, Greg, automotive if I look at a lot of the IP that you've developed over the years, your ASIC capability, the 5G IP, what you're doing with Android for Android also, all the peripherals, Wi Fi Six, etcetera. There is a lot of opportunity here for you to sell into automotive markets. And we haven't really seen much comments around the strategy here for MediaTek. So you maybe talk about how you're thinking about an automotive opportunity for MTK?
What sort of content per car when you start thinking about the capabilities that sit within MediaTek to upsell into the auto industry. What sort of long term opportunity do you think meditex capable of doing? And is this a key part of your growth story, long term? I mean, now you're building a are you building a meaningful organization to attack this? And have you started to get some meaningful backlog yet?
Thank you.
Okay. Automotive is the it's a big market, but also difficult market because of the various special requirements, for the entry We started with the, kind of an infotainment video products. We have been assessing the connectivity products. By that, the same modem for 4g and for 5g in addition, as well as the Wi Fi modules. My my my, of course, we have if you think what we have been through during the last couple of years, we really have a lot of work at hand.
To get where we are today and where we will be, 4th quarter and next year. So I would say automotive is not right now, the top priority for our 5G for modem and the WiFi business. What we're doing is to develop the same modem and the 5G module capability so that we can course, with the right specs for the automotive requirements. My feeling is it will come into play, but probably at the later stage of our of the cycle. Usually, it takes a longer time for the industry to, to move into 5G and Wi Fi Six for instance.
We are we aren't really confident that media attack being one of the very few players with both 5g modem and the Wi Fi Six capability. We will be a key player in that segment later on. Thank you.
Okay. Great. And maybe just one final question, if I may, on Huawei. You're shipping now to all OEMs in mainland China. And I think Huawei has very high market share at the moment.
Something like over 70% in mainland China for 5G. And your relationship is just really ramping up here with these guys. Do you need any, I mean, can you give us any sort of color on whether you need a license to service Huawei or not. And then when you think about planning, the planning challenges around managing a relationship with Huawei at the moment, how sustainable do you think the business is, into next year and beyond factoring in how volatile things are at the moment? How sustainable do you think that opportunity is for MediaTek?
Thank you.
Brett, I think, 1st of all, we just compiled for the global trade regulations and requirements basis, for the compliance, we take down very seriously. And that's point number 1. 102, I guess our policy will not be able to comment in particular or specific customer. I think that's
Ladies and gentlemen, I'm sorry we are running out of time. So that concludes our Q And A session. I'll hand it over to Ms. Jessie Wang for closing comments. Ms.
Wang, please proceed.
Ladies and gentlemen, this concludes the MediaTek 2020 second quarter conference call. We would like to thank you for your participation and now you may conclude this comment. Thank you.
Thank you, Jesse. And we thank you for your participation in today's conference. You may now disconnect. Thank you, and goodbye.