MediaTek Inc (聯發科), which supplies chips primarily to Chinese smartphone vendors, yesterday said that net profits last quarter surged 34.8 percent annually as gross margin climbed above 40 percent for the first time in three-and-a-half years.
The figure can be considered an achievement by chief executive officer Rick Tsai (蔡力行), who took over in July 2017 with a priority to increase gross margin to 40 percent and recover the firm’s market share in China.
MediaTek achieved the target two quarters earlier than expected.
During the quarter that ended on March 31, gross margin increased to 40.7 percent from 38.4 percent a year earlier and from 38.9 percent the previous quarter.
Tsai attributed the improvement to better product portfolios.
Gross margin is to hover at about 40.5 percent this quarter, Tsai told an investors’ teleconference.
Commenting on the company’s 5G chip road map, Tsai said it plans to roll out its first 5G system-on-chip supporting sub-60GHz bands later this year and its first 5G millimeter-wave chip next year.
“MediaTek is confident about its 5G chip product road map and specifications,” Tsai said.
Net profits last quarter jumped to NT$3.42 billion (US$110.66 million) from NT$2.54 billion a year earlier.
On a quarterly basis, net profits fell 16.2 percent from NT$4.08 billion, due to seasonal weakness, the company said.
Earnings per share climbed to NT$2.17 from NT$1.61 a year earlier, but were down from NT$2.63 a quarter earlier.
MediaTek gave a better-than-seasonal revenue growth forecast.
Revenue this quarter is expected increase 13 to 21 percent quarterly to between NT$59.6 billion and NT$53.8 billion, compared with NT$52.72 billion last quarter.
The company has seen quarterly revenue growth of 10 to 15 percent in the second quarter over the past few years.
Its optimism is based on strong double-digit percentage growth of new mobile products and new chips from its growing product segment, Tsai said.
China’s first-tier smartphone vendors last quarter adopted MediaTek’s new Helio P70 chip for their new models and some of them have chosen the new Helio P90 chips for their models that are to be released late this quarter, Tsai said.
Application-specific integrated circuits (ASICs) are included in the company’s growing product segment, along with chips for Internet of Things devices and power management chips.
MediaTek plans to ramp up production of its first ASIC used in networking devices for enterprise clients next quarter after years of development, Tsai said.
The chipmaker is also developing ASICs for data centers and equipment supporting 5G technology, he added.
The US$2 billion networking ASIC market is expected to grow at a mid-to-high single-digit percentage annually, Tsai said.
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