If MediaTek can’t handle the smartphone chip market, where can it go?
MediaTek's co-CEO Rick Tsai said in the earnings conference that its gross profit margin has stopped falling and is rebounding, with the target for the second half of 2018 pointing to 37-39%, attracting long-term foreign buying to enter the market and driving MediaTek's stock price to the upper limit of NT$292.5 on the 1st, setting a new record in more than 20 months. Although MediaTek's revenue growth in the third quarter of 2017 was not as expected, the company pointed out that the proportion of growth product lines in its performance has rapidly increased to more than 25%. Coupled with the statement that the gross profit margin is expected to stop falling and start to rise, MediaTek, which has been pessimistic by the market for a long time, has finally begun to whitewash itself.
Because MediaTek has announced that business opportunities in emerging application products such as the Internet of Things (IoT), shared bicycles, cloud applications, smart homes, artificial intelligence (AI) and automotive electronics have gradually exploded, Taiwanese IC design companies are also expected to be greatly encouraged to lock in niche products, markets and customers for in-depth exploration, and create a new wave of growth opportunities for the company. Among them, the demand for microcontrollers (MCUs) and high-speed transmission chips is promising and has attracted much attention from the market.
Although MediaTek's shipments of smartphone and tablet chips in the mobile computing platform did not grow in the third quarter compared to the second quarter, if the demand in the mainland terminal market is expected to improve significantly in the third quarter, the problem of MediaTek's declining smartphone chip market share has not been completely ruled out.
However, Cai Lixing bluntly stated that he would prioritize the Helio P series smartphone chip solutions to upgrade performance, optimize power consumption and reduce costs. He also plans to launch two new P series smartphone chips and the latest entry-level 4G chip with a super cost structure in the second half of 2017.
In 2018, two more P series chips will be put into mass production. MediaTek has a clear strategy to defend the market share of mid- and low-end smartphone chips in mainland China. The company's senior management and R&D team are determined to return to the mid- and low-end smartphone chip market in which they are good at. As MediaTek's chip cost-effectiveness has always been a more obvious advantage in this area, the view that the company's operating performance is expected to bottom out and rebound has gradually become a market consensus.
Compared with the difficulty of MediaTek's tactical change to turn around, other small and medium-sized Taiwanese IC design companies, which knew that it was too late, have already shifted to more niche development strategies in terms of product layout, technology investment and market cultivation. Compared with MediaTek, which has to wait another 1-2 years before seeing obvious transformation results, many Taiwanese IC design companies that focus on MCUs, high-speed transmission chips, and server chips are expected to reap the rewards ahead of time.
Among them, artificial intelligence applications, which are currently the focus of the market, excluding the core CPU and GPU high-speed computing chips, high-speed transmission chips responsible for intermediate signal transmission, server chip solutions responsible for cloud application connection, and MCUs that control new terminal application functions, will all be new business opportunities for Taiwanese IC design companies to fully demonstrate their strengths. Since the second half of 2017, the mainstream specifications including the Type-C interface have shown obvious trends, coupled with the fierce demand for new server business opportunities, and the global MCU market has just set off a wave of shortages. Taiwanese IC design companies still have a lot of time and space to lay out the new generation of chip business opportunities dominated by artificial intelligence.
Source | DIGITIMES
Exclusively compiled by Xinshiye
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