MediaTek Q4 net profit down over 34% quarter-on-quarter

Taipei--Taiwan-based integrated circuit designer MediaTek Inc. (???), which specializes in smartphone chip design, said on Thursday that net profit for the fourth quarter of last year fell more than 34 percent from the previous quarter, at a time when competition in the global smartphone market intensified, an earnings report released on Thursday showed.

At an investor conference, MediaTek said that net profit for the October-December period stood at NT$5.14 billion (US$164 million), down 34.4 percent from the third quarter, but up 22.9 percent year-on-year.

Fourth quarter earnings per share stood at NT$3.23, down from NT$4.98 seen in the previous quarter, but higher than the NT$2.83 recorded in the same period last year, the IC designer said.

Due to slow season effects in the fourth quarter, MediaTek's consolidated sales dropped 12.4 percent quarter-on-quarter to NT$68.68 billion. However, the figure was still 11.3 percent higher than a year earlier.

In the October-December period, MediaTek's gross margin fell 0.7 percentage points from the previous quarter to 34.5 percent, an indication of rising competition in the global smartphone market. Smartphone chips accounted for more than 60 percent of MediaTek's total revenue.

In 2016, Mediatek's net annual profit fell 6.7 percent from 2015 to NT$24.03 billion, its lowest for four years, with an EPS of NT$15.16, the IC designer said.

MediaTek's consolidated sales for 2016 rose 29.2 percent year-on-year to NT$275.51 billion, a record high for the company on the back of efforts to expand production, but its gross margin fell to a record low of 35.6 percent, a reflection of escalating competition.

MediaTek Vice Chairman and President Hsieh Ching-jiang (???) said at the investor conference that he remained cautious about the market outlook for the first quarter of this year as slow season effects will continue to impact sales.

As a result, Hsieh said that consolidated sales for the January-March period could range between NT$53.6 billion and NT$59.1 billion, down 14-22 percent from the previous quarter. He added that MediaTek expects its gross margin to come under pressure in the first quarter and to range from 32.5 percent to 35.5 percent.

In the first quarter, shipments of smartphone and tablet computer chips could fall to between 105 million and 115 million units from 135 million and 145 million in the previous quarter, Hsieh said.

Hsieh added that smartphone shipments worldwide for 2017 could range between 1.6 billion and 1.7 billion units, up 4-6 percent from a year earlier, adding that growth will large depend on emerging markets as demand from China is expected stay flat.

Source: Focus Taiwan News Channel