MediaTek, Qualcomm find a ray of hope in AI chipsets amid US tariff gloom

Top chip makers Qualcomm and MediaTek view the evolving US tariff situation as creating uncertainties in almost all markets around the world and dragging growth but are positive about demand for AI-enabled chipsets, particularly in the premium smartphone segment that’s growing fast in emerging markets like India.

“For the short term, as trade negotiations continue to unfold, we are closely observing their impact on global economies by working with our global supply chain partners and customers to navigate the uncertainty,” Rick Tsai, CEO at MediaTek, said at the company’s recent earnings call.

“In the meantime, we are carefully monitoring our inventory and managing our operations. For the mid- to long-term, we believe the trend to our ubiquitous AI remains intact, and our growth prospects remain solid,” he said, while expecting a moderate decline in demand.

Qualcomm CEO Cristiano Amon said the company’s business strategy remains unchanged despite the uncertainties, albeit providing a lower revenue guideline than market expectations for the June quarter.

“We do not see any material direct impact to us at this point, the landscape obviously is dynamic, so we’re closely monitoring, but we’re very focused on things we control and very focused on supporting our customers as well… We have a very diversified global supply chain. And so that positions us very well to navigate challenges that might happen as a result of tariffs,” Amon said.

Both chip makers said they have not faced any changes in orders from customers, partly due to the long production cycle. Interestingly, tariff uncertainties may have even contributed to better-than-expected demand in the first quarter, as brands looked at building inventory in advance.

Market trackers said chip makers are insulated from significant tariff impact due to the nature of their supply chain. The manufacturing of the chip sets largely takes place in Taiwan or Korea, which insulates the companies from a trade fallout with China.

The origin of the final assembled device is often what determines the tariff applicability when shipped to a market like the US, so MediaTek and Qualcomm are not directly exposed to the evolving uncertainties, analysts said.

“However, if their customers face higher costs due to tariffs on the final devices, they might ask Qualcomm and MediaTek to share that cost burden,” said Parv Sharma, analyst at Counterpoint Research.

“The complex global nature of the semiconductor supply chain, involving design, manufacturing (wafers), packaging and assembly in various countries, makes the tariff impact multifaceted. Companies are exploring various initiatives, including supply chain traceability and potentially utilising concepts like ‘reexport’ (shipping products through a third country) to navigate or mitigate tariff impacts,” said Sravan Kundojjala, analyst at Semianalysis.

Qualcomm’s Amon said that the company is focused on the opportunities provided by the next wave of AI smartphones and growing its non-handset revenues to $22 billion. The company sees higher AI demand as a means to increase smartphone average selling prices, with demand expected to surge after third-party app developers start rolling out AI use-cases.

MediaTek sees increasing AI adoption driving structure mix enhancement and better than expected demand in the first quarter.