MediaTek Inc (聯發科) yesterday said quarterly net profit more than doubled last quarter as gross margin bounced back for the first time in 13 quarters, underpinned by rising demand for new cost-effective mobile processors.
Gross margin should remain stable this quarter at about 36 percent, due to climbing demand for new mobile chips when the end market returns to high season, MediaTek told investors in a teleconference.
That bodes well for MediaTek, the world’s biggest mobile phone chip supplier to China, as it aims to recoup its market share over the next one to two years, a goal set in June when Rick Tsai (蔡力行) was picked to share CEO duties with founding chairman Tsai Ming-kai (蔡明介).
The Hsinchu-based chip designer has over the past few years struggled to defend its gross margin and market position, due especially to escalating price pressure from bigger rival Qualcomm Inc.
“We believe our new mobile processors, which are very competitive, will help us expand our market share and improve gross margin under the competitive pricing environment,” Tsai said.
The cost-effective Helio P23 and MT6739 smartphone chips deliver better gross margin due to improved cost structure and richer features, such as support for dual cameras and popular 18:9 aspect ratio displays, MediaTek said, adding that its next-generation Helio P6 processor would enable functions including artificial intelligence, facial recognition and new 3D sensing functions.
Mass production of the new mobile processors is to begin this quarter, the firm said, adding that it plans to roll out two new Helio P family processors with a visual processing unit that supports artificial intelligence, facial recognition and augmented and virtual reality features.
“We expect demand for those new mobile processors to increase as the smartphone end market begins a new product launch spree. They will account for a larger portion, between 15 percent and 20 percent,” of total mobile chips, Tsai said.
Asked about media speculation that Apple Inc is designing processors for future generations of its iPhones and iPads based only on MediaTek chips due to a legal battle with Qualcomm, Tsai said he has “no knowledge of it.”
MediaTek yesterday reported that net profit last quarter surged to NT$5.06 billion (US$167.72), compared with NT$2.21 billion in the second quarter. On an annual basis, net profit dropped 35.4 percent from NT$7.83 billion.
The firm expects revenue this quarter between NT$59.2 billion and NT$64.3 billion, representing a quarterly decline of 7 percent to an increase of 1 percent respectively from NT$63.65 billion last quarter.
Shipments of processors used in smartphones and tablets are to remain unchanged at between 110 million and 120 million units this quarter, it said.
Mobile processors are the main revenue source for the chipmaker, last quarter contributing about 35 percent to 40 percent of overall revenue.
MediaTek said its board has approved the promotion of co-chief operating officer Joe Chen (陳冠州) to president, succeeding Hsieh Ching-jiang (謝清江).
Hsieh is to focus on integrating the resources of the firm’s subsidiaries, MediaTek said, adding that the personnel adjustment is to take effect on Dec. 1.
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