MediaTek Inc (聯發科) yesterday reported a 45 percent quarterly decline in profit for last quarter due to dwindling demand for chips used in consumer electronics.
Net profit plunged to NT$3.75 billion (US$121.8 million) compared with NT$6.87 billion in the third quarter, the company said.
Earnings per share fell to NT$2.42 from NT$4.39 the previous quarter.
Last year as a whole, MediaTek’s net profit dipped to its lowest level in six years at NT$20.78 billion, down 13.7 percent from NT$24.07 billion in 2017.
Earnings per share shrank to NT$13.26 from NT$15.56.
However, gross margin improved to 38.5 percent last year, from 35.6 percent in 2017.
“MediaTek is well on track toward a recovery. We have seen nascent progress as reflected in the company’s financial results for 2018,” MediaTek chief executive Rick Tsai (蔡力行) told investors.
The firm is targeting a gross margin of 40 percent this year by enhancing its competitiveness and gaining a larger market share, Tsai said.
MediaTek plans to ship a small volume of new Helio P90 chips this quarter, featuring artificial intelligence capabilities that enhance picture quality.
The company also plans to roll out its first 5G chip by the end of this year.
MediaTek hopes to translate its product enhancement efforts into revenue growth.
The company yesterday set a new goal of growing its revenue by a moderate rate this year, or at least to retain revenue at last year’s level of NT$238.06 billion, even though smartphone demand would remain weak before solid replacement demand for 5G models in 2020.
The growth areas would be chips used in 5G-enabled devices, automobiles and application-specific ICs for game consoles or data storage, Tsai said.
Those chips would contribute 5 percent of total revenue this year and 10 percent next year, he said.
For this quarter, Tsai said revenue would contract by between 12 percent and 20 percent to between NT$48.7 billion and NT$53.6 billion from last quarter’s NT$60.89 billion, on softening demand during the slow season.
Gross margin could trend up to about 39.5 percent from last quarter’s 38.9 percent, he said.
Separately, ASE Technology Holding Co (日月光投資控股), the world’s largest chip packager and tester, yesterday said its net profit in the fourth quarter fell 13 percent quarter-on-quarter to NT$5.45 billion from NT$6.26 billion due to weakness in smartphone demand.
Gross margin fell to 16.4 percent from 17.1 percent quarter-on-quarter, which the company attributed to a decline in inventory provision as cryptocurrency demand fell short of expectations.
This year, ASE said it aims to grow its revenue quarter by quarter, with growth momentum coming from its system-in-package (SiP) business and its new “Fan-out” packaging technology.
ASE is targeting growing its SiP revenue by US$100 million a year, and Fan-out revenue by between US$50 million and US$100 million a year in the next few years, chief operating officer Tien Wu (吳田玉) told investors.
To cope with growing geopolitical risks, ASE plans to allocate more resources and investment to expanding its manufacturing sites in Mexico, Taiwan and China, Wu said.
“If tariff conditions turn in a different direction, you need to have some kind of backup plan to encompass new rulings or else you cannot ship products to some nations,” Wu said.
The company plans to earmark about US$1.2 billion for new equipment spending this year, similar to last year’s amount, it said.
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