MediaTek Inc (聯發科) yesterday said revenue this year would dip unexpectedly for a second straight year due to steeper deceleration in the global mobile phone market.
The forecast is a downward adjustment from April, when the world’s second-biggest handset chip designer still expected annual growth in revenue and mobile chip shipments.
“At the beginning of the year, it was generally expected that global shipments of mobile phones would grow 4 to 5 percent year-on-year. Now, no growth is expected,” MediaTek chief executive officer Rick Tsai (蔡力行) told an investors’ conference.
“This will weigh on our shipment totals,” Tsai added. “As well, some customers have become conservative in their business outlook.”
MediaTek said it expects mobile chip shipments to fall slightly from last year’s numbers of 43 million to 45 million units.
The slowdown in shipments would also cause a mild decrease in revenue this year, Tsai said.
Mobile chips are a major revenue source for MediaTek, contributing as much as 42 percent of its revenue and totaling NT$60.48 billion (US$1.98 billion) last quarter.
MediaTek saw its revenue last year shrink 13.53 percent from a year earlier to NT$238.22 billion, following market share losses, primarily in China, to Qualcomm Inc.
Maybank Kim Eng Securities Ltd said it expects MediaTek to see a 2.2 percent annual decline in revenue to NT$233.1 billion this year.
However, the company is on course to improve its gross margin, Tsai said, adding that its medium-term goal is to boost its gross margin by 40 percent and operating margin by 10 percent.
“Revenue for this quarter will not show growth as significant as during the peak season,” Tsai said. “Demand for smartphones is diminishing.”
Revenue is expected to increase by 3 to 11 percent quarterly, totaling NT$62.3 billion to NT$67.1 billion this quarter, the company said, adding that shipments of mobile chips would remain at about 100 million to 110 million units this quarter, unchanged from last quarter.
Gross margin is forecast to be between 36.7 percent and 39.7 percent this quarter, compared with 38.2 percent last quarter, the company added.
MediaTek counts Chinese mobile vendors among its major clients.
Oppo Mobile Telecommunications Corp (歐珀移動) and Vivo Communication Technology Co Ltd (維沃移動通信) use MediaTek’s new Helio P60 chip in their phones, while Xiaomi Corp (小米) outfits its new entry-level Red Rice 6 with MediaTek’s first Helio A series chip.
In the second quarter, the company reported that net profit increased 2.39-fold to NT$7.5 billion from NT$2.21 billion a year earlier and 1.82-fold from NT$2.66 billion in the first quarter.
Last quarter’s figures fell short of an estimate of NT$8.6 billion made by Maybank.
Unlike some of its local peers, MediaTek said it has no plan to list its Chinese subsidiaries on Chinese stock exchanges.
Shares in MediaTek yesterday fell 2.31 percent to NT$254 in Taipei trading.
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