Handset chip designer MediaTek Inc (聯發科) yesterday expressed confidence that it would be able to recover some lost turf next year as its recovery plan begins to bear fruit earlier than expected, as evidenced by a rebounding gross margin.
MediaTek attributed the improvement primarily to a repositioning of its mobile processor strategy to focus on the mid and high-performance Helio P series, which target smartphones with a price tag of 1,500 yuan to 3,000 yuan (US$230 to US$460), while halting marketing for the Helio X series, which is used in premium phones.
The strategic shift was made about seven months ago, when semiconductor veteran Rick Tsai (蔡力行) was appointed co-CEO to help steer the company through a rough time.
The company had seen its gross margin and market share slide due to intensifying competition, mainly from Qualcomm Inc.
The change has borne fruit, with the Helio P series processors being adopted by some of the world’s top five mobile phone brands, including China’s tier-one mobile brands Huawei Technologies Inc (華為), Oppo Mobile Telecommunications Corp (歐珀移動) and Vivo Electronics Corp (維沃移動通信).
“We have seen our gross margin stabilize and gradually recover, indicating that our mobile business is stabilizing,” Tsai told a media briefing.
MediaTek saw its gross margin pick up to 36.4 percent in the third quarter, from 35 percent in the second quarter, stemming 13 quarters of declines.
“Our next step is to take back some of the market share we lost. We are confident that we can do it and that our gross margin will continue to grow mildly and stably,” Tsai said.
To reclaim lost turf, MediaTek plans to roll out more new processors from its Helio P family, including the Helio P40, in the first half of next year, after its new Helio 23 and Helio 30 processors gained traction this quarter.
“We are cautiously optimistic about the company’s outlook next year,” Tsai said. “Although mobile phone growth in China is slowing, we still expect replacement demand in emerging markets to drive growth.”
MediaTek also attributed the business recovery to its enhanced technological capabilities.
The company’s new processors will incorporate artificial intelligence (AI) technology, allowing users to take better-quality pictures, the company said.
“AI technology will be extended to be used at the edge, or on end products. This will be a very important trend in the next two to three years. MediaTek will apply AI technology to both our mobile and home platforms,” company president Joe Chen (陳冠州) said.
The chipmaker also plans to apply AI technology to its chips for autonomous vehicles.
The company plans to roll out three 7-nanometer processors next year made by Taiwan Semiconductor Manufacturing Co (台積電), Tsai said.
Most of MediaTek’s advanced processors currently deploy 12-nanometer technology, he said.
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