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MediaTek’s Q1, 2016 Revenues Likely To Fall Sequentially

March 31, 2016 - Written By Kishalaya Kundu

MediaTek is one of the leading fabless semiconductor companies in the world alongside the likes of Qualcomm, Nvidia and AMD. Being a fabless company though, MediaTek needs to outsource its manufacturing to a third-party foundry operator, even though it designs and markets its own chips. The company that generally does the manufacturing for MediaTek is fellow Taiwanese tech company, TSMC (Taiwan Semiconductor Manufacturing Company), which happens to be the largest pure-play semiconductor foundry in the world, with manufacturing facilities in a number of locations in Taiwan and mainland China. While its main manufacturing facility is located at the Hsinchu Science and Industrial Park in Taiwan, it has several other factories strewn across various regions of the island nation.

In early February, a strong earthquake struck Taiwan, leaving widespread death and destruction in its wake. While over a hundred people were reported to have died in the tragedy, the event also adversely affected several companies that have manufacturing facilities in the country, with TSMC being a case in point. The earthquake interrupted production and damaged wafers at the TSMC factories, thereby disrupting the production schedule of MediaTek’s MT6625 4-in-1 connectivity chip. With production still only limping back to a semblance of normalcy at TSMC, MediaTek has been unable to meet demands for it over the past several weeks. That being the case, MediaTek’s revenues for the month of March is likely to remain depressed, which is certainly a cause for concern, especially as the company’s February, 2016 revenues of NT$13.24 billion ($404.7 million) was reported to be its lowest in twelve months.

What’s worse for MediaTek is that industry sources in Taiwan reportedly claim that the company will be unable to ship the MT6625 chip in large enough numbers to meet demand any time soon, as production at TSMC is unlikely to return to normal until May or June this year. That being the case, the company’s Q1, 2016 revenue is estimated to fall by 7 to 15 percent to between NT$52.5 – NT$57.4 billion ($1.63 – $1.78 billion) sequentially from Q4, 2015. However, MediaTek will be hoping that TSMC will be able to get its production back to normal soon, so that it doesn’t have to suffer financially any more than it already has over the past several weeks.