Huawei incident leads to higher ASP of MediaTek P90 products

The United States has imposed tariffs on China and Mexico, and most Taiwanese technology companies have suffered, but some stocks that benefited from order transfer have also emerged. For example, Qualcomm announced that it would stop supplying Huawei, and the market speculated that mobile phone chip manufacturer MediaTek (2454) may benefit from order transfer; the United States imposed tariffs on Mexico, and Quanta Computer (2382) was also believed to have the opportunity to benefit from order transfer.

After taking strong measures against mainland China, US President Trump made another move, announcing a 5% tariff on all Mexican products exported to the US, and threatened to gradually increase the tariff. Since most of the five major Taiwanese electronics companies have factories in Mexico and then export to the US market, the market is worried and will affect the operation of foundries. In particular, Wiwynn has the highest proportion of production in Mexico, which also makes the market think whether Quanta will have the opportunity to benefit from the "order transfer effect". Quanta does not have a factory in Mexico, but only has a small assembly plant in the United States. However, Wiwynn's customers overlap with Quanta's, driving the stock price up more than 4.5% during the trading session.

In addition, news recently broke that Quanta's major customer HP has contracted a production line. Investment advisory firms said that Quanta's new factory in Linkou focuses on artificial intelligence and 5G-related products, and its production bases are diversified outside of China, which is conducive to business dealings.

An investment advisory firm said that MediaTek's latest earnings call forecasted a 13% to 21% quarter-on-quarter increase in revenue for the second quarter, mainly due to the launch of new products. In addition to mobile APs, growth-oriented production lines will also show double-digit growth due to increased demand for Bluetooth headsets and smart terminal products. It is estimated that second quarter revenue will increase by 17% quarter-on-quarter and 2% year-on-year. Net profit after tax may decline, mainly because MediaTek disposed of HiSilicon Technologies shares in the same period last year. If we only look at the core business profit, the year-on-year growth will be 37%.

In addition, the Huawei incident has continued, Qualcomm has stopped supplying Huawei, and the market is paying attention to whether MediaTek may benefit from this. MediaTek has gradually entered the high-end market in the late 4G period and expanded its market share. The ASP of the P90 product is relatively high. It is estimated that at the current time when smart devices are not growing, MediaTek's mobile computing production line will grow by a high single digit this year.