Taiwanese manufacturer of the MediaTek chip seems to be the one suffering from the over growing market value of Qualcomm’s chipset. Online news says that the Taiwanese company will likely post a revenue decline of 12 to 20% in the first quarter of 2019 and a smaller increase in revenue for the entire year.
In the fourth quarter of 2018, MediaTek saw their revenue decline to NT$60.89billion (US$1.98billion) which is around 9.2% which they attributed to seasonal slowdown as a result of the decline in demand for consumer electronics. But due to their product mixing, their gross margin rose to 0.4pp on the fourth quarter to 38.9%. The Taiwanese company recorded a profit of NT$3.75billion in the fourth quarter which saw them fall to about 45% with EPS coming to about NT$2.42.
MediaTek consolidated revenue recorded a 0.1 fall to NT$238.06billion while their gross margin rose to 2.9pp last year to 38.5%. A net profit of NT$20.78billion was posted by the company which showed that they fell down to 13.7% and with EPS reaching NT$13.26.
The CEO of MediaTek Rick Tsai seems to be aware of the decelerating smartphone growth. He stated that the global smartphone market might not improve until the recent 5G compatible devices are used globally in commercial quantity.
Currently, MediaTek is moving up with the development of its 5G enabled solutions and they are hoping to introduce the 5G SoC series before the end of 2019 since they have already unveiled there 5G modem chip in the first half of the year, said Tsai. The CEO also disclosed that the company is also going to unveil its new chip solutions for the next generation Wi-Fi technology known as the Wi-Fi 6(802.11ax) and automotive electronics products in 2019. According to Tsai, the company will continue to diversify offerings for further product mix improvement since the company’s product mixing is currently yielding fruits.
Thus, the company will likely post a 38 – 41% gross margin even though their revenue fell to 20%.