MediaTek Inc (聯發科), which supplies mobile phone chips to Chinese brands, yesterday posted 35.8 percent annual growth in net profit for the third quarter, after gross margin rebounded to a three-year high amid robust customer demand.
Net profit jumped to NT$6.87 billion (US$221.84 million) during the quarter compared with NT$5.06 billion during the same period last year. On a quarterly basis, net profit shrank 8.3 percent from NT$7.5 billion.
Gross margin improved to 38.5 percent, from 38.2 percent in the second quarter and 36.4 percent in the third quarter of last year.
MediaTek said it expects gross margin to remain stable at a range of between 36.7 percent and 39.7 percent this quarter, underpinned by new smartphone chip launches.
The chipmaker plans to launch a mid to high-end smartphone chip, dubbed the P70, this quarter, with an embedded artificial intelligence engine, before numerous new smartphone chips hit the market in the first half of next year, it said.
New mobile phone chips also help offset weakness in other areas, such as Internet of Things (IoT) devices, TV chips and power management chips, MediaTek said.
As a result, revenue this quarter is expected to fall by 4 to 12 percent quarter-on-quarter to between NT$59 billion and NT$64.3 billion, company chief executive officer Rick Tsai (蔡力行) told an investors’ conference.
“Smartphone [products] are to perform above seasonal patterns, thanks to new product launches,” Tsai said.
MediaTek said it expects shipments of its mobile phone and tablet chips to be between 100 million and 110 million, little changed from last quarter.
The forecast is lower than the company’s previous growth estimate for this quarter.
“The Chinese market is showing some weakness this year. China and emerging markets are facing headwinds because of weakening local currencies,” Tsai said. “Our [smartphone chip] shipment guidance is already quite good.”
Chips used in smartphones and tablets contributed 30 percent to 35 percent to the company’s total revenue last quarter, making such chips one of the three main pillars of MediaTek’s revenue.
Chinese smartphone vendors Xiaomi Corp (小米), Oppo Mobile Telecommunications Corp (歐珀移動) and Vivo Electronics Corp (維沃移動通信) adopted MediaTek’s P22, A22 and P60 chips for their new phones last quarter.
MediaTek said it plans to unveil the company’s first 5G modem, the M70, in the first half of next year and launch its first 5G single chip by the end of next year, matching the pace of its rivals, Tsai said.
MediaTek is targeting the below-6 gigahertz band in China’s 5G market, he said.
MediaTek is also to ship its first application-specific IC for cryptocurrency mining machines in the first quarter next year at the earliest for its Chinese clients, Tsai said, adding that the chips would be produced using advanced 7-nanometer technology.
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