Thu, Oct 06, 2016 - Page 12 News List

Chip shortage likely to drag on, MediaTek says

SUPPLY CONSTRAINTS:The industry is still reeling from the effects of a quake in southern Taiwan in February, which disrupted production, a MediaTek executive said

By Lisa Wang  /  Staff reporter

MediaTek Inc vice chairman and president Hsieh Ching-jiang attends a news conference in Taipei yesterday to mark Google’s 10th anniversary in Taiwan.

Photo: CNA

Handset chip designer MediaTek Inc (聯發科) yesterday said that a chip supply constraint is likely to persist through the end of the year.

While the company did not elaborate on how the issue is likely to affect its business this quarter, vice chairman and president Hsieh Ching-jiang (謝清江) said that it would be a slower season than the third quarter, citing seasonal factors and weakening growth momentum in China.

The Hsinchu-based company has a long list of Chinese clients, including Oppo Mobile Telecommunications Corp (歐珀移動), Vivo Electronics Corp (維沃移動通信) and Xiaomi Corp (小米).

Chip supply became tight from the second quarter after a powerful earthquake hit southern Taiwan in February, disrupting production by local chipmakers, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), MediaTek said in June.

Hsieh also attributed the chip shortage to robust demand for low-and-mid-range smartphones, adding that he hoped the situation would ease next year.

“We have not seen any significant improvement in the fourth quarter, compared with the third quarter,” Hsieh said on the sidelines of a news conference in Taipei to celebrate Google’s 10th anniversary in Taiwan. “Supply of certain [chips] used in mobile phones remains tight, especially 28-nanometer chips.”

Hsieh said the third quarter would be its best this year and that the company is under pressure to hold onto its gross margin for this quarter amid intensifying competition.

MediaTek is hoping to lift its gross margin by increasing shipments of its higher-margin Helio chips.

The firm expects to start shipping its high-end Helio-X30 chip in the first half of next year, Hsieh said.

The chip is to be produced using TSMC’s most advanced 10-nanometer technology, he said.

In August, Hsieh said that revenue for last quarter would grow between 8 and 16 percent, or from NT$72.53 billion (US$2.31 million) in the second quarter to between NT$78 billion and NT$84 billion last quarter.

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