Apple and Xiaomi are both betting on AI phones! 3nm SoC demand is bullish, which chip manufacturers will benefit first?

Starting from September, new phones from Apple, Xiaomi, Oppo, Vivo, and Honor have been released. Recently, there have been frequent rumors in the industry that Huawei's flagship phone Mate70 will also be launched at the end of November. The built-in self-developed chip Kirin 9100 and the native Huawei HarmonyOS system have also attracted attention. This year's smartphone war is about to erupt.
The Apple iPhone 16 Pro series is equipped with the latest A18 Pro chipset. On October 14th, vivo released its flagship model, the vivo X 200 series, equipped with the MediaTek Dimensity 9400 processor. The Xiaomi 15 series is equipped with Qualcomm's first Snapdragon Ultimate Edition 8 Elite, and recently released 5G smartphones have seen price increases. Why is this wave of flagship models with AI capabilities rising in price? Industry insiders say that upgrading the 3nm process on flagship platforms does indeed result in significant cost increases, and another reason is that core components such as memory have also entered a new price cycle. Recently, heavyweight companies such as Apple, Qualcomm, and MediaTek have released their latest financial reports. Let's analyze the changes and trends in the mobile SoC chip market from the financial reports of terminal companies and upstream chip companies.
The smartphone market continues to recover, with the hot sales of Apple's iPhone 16 driving an increase in smartphone SoC shipments
Smartphone sales continued to be weak in 2023, but there was a long lost growth in 2024, driven by a wave of replacement phones driven by AI smartphones. According to the latest data released by research firm Canalys, global smartphone shipments in the third quarter of 2024 increased by 5% year-on-year, reaching 309.9 million units, the strongest performance since 2021. Samsung ranked first with a shipment volume of 57.5 million units, while Apple's iPhone 16 series performed strongly in emerging markets with a historic shipment volume of 54.5 million units, ranking second. Xiaomi ranks third with a shipment volume of 42.8 million units and a market share of 14%. OPPO and vivo ranked fourth and fifth in terms of shipment volume, respectively. In the second quarter of this year, after the recovery of smartphones, the mobile SoC market showed a growth trend. According to Canalys' data, MediaTek maintained its leading position as a processor manufacturer in the second quarter of 2024, with shipments reaching 115.3 million units, a year-on-year increase of 7%. Qualcomm shipped 71 million units in the second quarter, ranking second; Apple shipped 46 million units, a year-on-year increase of 6%, ranking third.
It is worth noting that in the second quarter, domestic 5G mobile chip manufacturer Ziguang Spreadtrum saw strong growth. Ziguang Spreadtrum has strengthened its layout in the entry-level market, shipping 25 million units, a year-on-year increase of 42%, ranking fourth. This reflects that Ziguang Spreadtrum is expanding its market share; Samsung shipped 17 million units, a year-on-year increase of 9%; Ranked fifth; HiSilicon returns to the list, shipping 8 million units in the second quarter, ranking sixth.
In the third quarter, Apple launched the iPhone 16, which led to an increase in shipments. After Apple released its financial report on November 1st, CEO Cook held a conference call and stated that the sales of the iPhone 16 series in September 2024 were stronger than those of the iPhone 15 series in September 2023. Thanks to the launch of Apple Intelligence, starting from this Monday, the user update rate for iOS 18.1 is twice that of iOS 17.1 in the same period last year.
As TSMC's largest customer, Apple usually has priority in obtaining products with advanced processes. The A18 Pro and A18 use TSMC's second-generation 3nm process N3E. According to research firm Canalys, Apple's iPhone 16 series has performed strongly in emerging markets, with a record shipment of 54.5 million units, driving high-speed growth in upstream SoC chip A18 and A18 Pro shipments. The iPhone 16 Pro uses Apple's self-developed A18 Pro chip, with an estimated cost of approximately $135 per chip.
Renowned Apple analyst Guo Mingchi stated that the iPhone 17 series chips scheduled for release next year may use TSMC's enhanced 3nm process N3P process, and only the iPhone 18 Pro model scheduled for release in 2026 may use the new generation 2nm process, mainly due to cost considerations.
The smartphone market is experiencing strong growth, with Qualcomm's fourth quarter revenue surging by 18%
On November 6th, Qualcomm released its fourth quarter financial report as of September 29th, with profits and revenue exceeding Wall Street's expectations. Qualcomm's revenue for this quarter reached $10.24 billion, an increase of 18.7% compared to the same period last year. The company reported a net profit of $2.92 billion. Qualcomm predicts that its performance in the first quarter of the next fiscal year will remain strong, and its stock price surged by 10% after the market was pushed up. As of press time, the increase is about 7%.
In the third quarter, Qualcomm's core business achieved unexpected growth. Among them, the largest revenue source for the quarter was the mobile chip business, with a revenue of 6.1 billion US dollars, a year-on-year increase of 12%, and analysts expected 6 billion US dollars. Qualcomm launched its 2025 high-end chip Snapdragon Ultra 8 Elite on October 22. Qualcomm CFO Akash Palkhiwala said during a conference call with analysts, "In the mobile business, our Android revenue increased by 20% compared to the same period last year
Qualcomm dominates the majority of the high-end Android smartphone chip market and also provides chips for various low-end Android devices. Last September, Qualcomm announced an extension of its contract to supply Apple chips, meaning it will continue to provide 5G chips for iPhones launched in 2024, 2025, and 2026.
Among other QCT businesses, automotive chips have grown the most rapidly, with sales reaching 899 million US dollars, an increase of 86% compared to the same period last year. Qualcomm stated that it currently has billions of dollars in cooperative business with multiple automakers and emphasized that this is the fifth consecutive quarter of growth in the automotive business.
In the third quarter, Qualcomm's IoT chip revenue was $1.68 billion, an increase of 22%, which was also higher than analysts' expectations of $1.55 billion. The revenue of this business comes from industrial chips, Meta's mixed reality headset Quest, and the smart glasses jointly launched by Meta and Ray Ban. Qualcomm predicts that the growth rate in the fourth quarter will slow down compared to the third quarter, but still significantly stronger than Wall Street's expectations. The fourth quarter revenue is expected to increase by 5.8% to 13.9% year-on-year, while analysts expect it to be close to the lower end of the guidance range.
In mid October, Qualcomm released its strongest AI smartphone chip, Snapdragon Ultra 8 Elite. The chip is equipped with an Oryon CPU and Adreno GPU, both of which have the highest performance three times that of the previous generation. The Orycon CPU has a maximum frequency of 4.32GHz, and Adreno GPU efficiency has increased by 40%. It is reported that Chinese manufacturers Xiaomi, Honor, Oppo, and Vivo have successfully launched phones equipped with this chip, and in the future, companies such as Samsung and Asus will launch more products using this chip.
MediaTek brings good news! Benefiting from the hot sales of mobile phone chips, we are optimistic about the annual revenue growth
On October 30th, MediaTek released its third quarter 2024 financial report. According to MediaTek's financial report, its revenue for the third quarter of 2024 was NT $131.813 billion (approximately NT $29.384 billion), a year-on-year increase of 19.7% and a month on month increase of 3.6%. The operating profit was NT $23.864 billion (approximately NT $5.32 billion), a year-on-year increase of 33%, higher than market expectations.
MediaTek stated that it benefited from the $1 billion revenue generated by the Dimensity 9300 chip in 2023 and contributed to a 70% increase in revenue. MediaTek CEO Cai Lixing mentioned at the press conference that smartphones equipped with the Dimensity 9400 have strong sales, such as Vivo announcing that its X200 series sales have reached 200% of the same period last generation, breaking Vivo's new phone sales record. With these exciting developments, MediaTek has also raised its revenue expectations for flagship smartphone chips this year to an annual growth rate of over 70%. On October 9th, MediaTek officially launched the Dimensity 9400 chip, which uses TSMC's N3E process and has 29.1 billion transistors. It adopts the second-generation full core design architecture and releases Arm's latest Cortex-X925 ultra large core CPU core and Arm Immortal-G925 GPU core, increasing its single core performance by 35% and multi-core performance by 28%. The Antutu comprehensive score has exceeded 3 million for the first time; In terms of AI performance, the Dimensity 9400, with its new eighth generation NPU, not only won the first place in AI benchmark testing at the Zurich Institute of Technology, but also introduced the Dimensity AI intelligent agent engine, end-to-end video generation, and end-to-end LoRA training, comprehensively improving the experience of end-to-end AI.
According to reports, the price of the Dimensity 9400 is approximately $150, which is significantly lower than the $200 price of Qualcomm's new 5G flagship mobile platform Snapdragon 8 Ultimate Edition. It has a more cost-effective advantage, and many manufacturers have cooperated with MediaTek. Recently, the flagship smartphones of vivo X200 series and OPPO Find X8 series equipped with this chip have been launched, and it is said that the Redmi K80 series will also adopt the Dimensity 9400.
MediaTek CEO Cai Lixing stated that due to the unexpected introduction of Dimensity 9400 customers, offsetting lower consumer electronics demand, MediaTek has raised its revenue contribution expectation for its flagship mobile phone chips this year, from over 50% annual growth to over 70% annual growth. The annual revenue growth rate in US dollars this year will be better than the original target of 16%.
Write at the end
The competition in the future mobile phone market is no longer a simple hardware battle, but a comprehensive competition involving ecosystem, user experience, and technological innovation. Among the top three smartphone markets in the world, China, India, and the United States, 48% of consumers have a high interest in AI. Whoever can combine AI functions with smartphones to provide a good experience will determine who will win in the future smartphone market, and mobile SoC chips will become an important factor.