MediaTek Inc (聯發科), the world’s biggest smartphone chip supplier, yesterday projected a sub-seasonal growth in revenue after reporting a 55 percent plunge in quarterly net profit last quarter due to a lengthy inventory correction cycle and sluggish smartphone demand mainly in China.
Net profit fell to NT$16.02 billion (US$510.35 million) last quarter, compared with NT$35.44 billion in the second quarter last year. Last quarter’s figure was the worst in about 10 quarters.
On a quarterly basis, net profit contracted 5.2 percent from NT$16.89 billion in the first quarter. Earnings per share dropped to NT$10.07 last quarter, compared with NT$22.39 a year ago, and NT$10.64 a quarter earlier.
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MediaTek expects revenue this quarter to pick up by between 4 and 11 percent sequentially to between NT$102.1 billion and NT$108.9 billion, slower than the quarterly growth of between 10 percent and 20 percent during a normal peak season.
MediaTek said it expects smartphones and Internet connection and power management chips to be the growth areas.
Gross margin this quarter would hold steady at about 47 percent, the same as last quarter.
“Recently, we observed that customer and channel inventories across major applications have gradually reduced to a relatively normal level. Recent demand from our customers has shown a certain level of stabilization,” MediaTek chief executive officer Rick Tsai (蔡力行) told an investors’ teleconference yesterday.
“However, our customers are still managing their inventory cautiously as global consumer electronics end market demand remains soft,” Tsai said.
As customers remain cautious about inventory management, revenue would grow moderately during the second half of this year, Tsai said.
Commenting on Huawei Technology Inc’s (華為) return to the 5G smartphone chip market, Tsai said MediaTek did not obtain a license to supply mobile phone chips to the Chinese company.
MediaTek does not expect major competition from Huawei, as the Chinese chipmaker focuses on designing chips used in premium models.
Offering a mid-to-longer-term business outlook, MediaTek said artificial intelligence (AI) applications would be a catalyst for semiconductor content and shorten the smartphone replacement cycle.
MediaTek is in “deep discussions” with potential customers to provide application-specific IC (ASIC) solutions, as most hyperscale datacenter operators are accelerating their chip development for generative AI solutions, Tsai said.
Specifically, the company is in talks with potential customers about providing advanced packaging solutions including CoWoS technology used in AI chips, he said.
It usually takes one-and-a-half to two years for such projects to yield results, Tsai said.
MediaTek said it did not generate revenue directly from AI chips, although most of its smartphone chips offer AI features.
MediaTek’s newly announced partnership with Nvidia Corp in the automotive chips area was also central to investors’ interest yesterday. MediaTek expects the collaboration to generate significant revenue by 2026.
A joint venture would not be created, it said.
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