MediaTek And TSMC Restoring Full Production In Taiwan

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MediaTek have an interesting history in a short space of time, having initially designed a number of reference feature phones before branching out into relatively simple chipsets for tablets. Over the years, MediaTek has evolved its chipsets to include integrated GPUs, modems, location sensors and similar, plus used more modern manufacturing technologies. Today, MediaTek have a broad range of different chips for different products and are investing into new technologies such as the Internet of Things and Virtual Reality, but still design a number of dedicated component chips for mobile devices. However, as MediaTek is a fabless semiconductor company – it does not own the chip factories or fabrication plants but instead contracts another company to build its product. One such company is the TSMC, Taiwan Semiconductor Manufacturing Company.

In early February 2016, a severe earthquake struck southern Taiwan, causing the unfortunate death of 117 people and widespread damage to buildings and infrastructure. The damage to this earthquake has caused supply and manufacturing problems for many different businesses, including MediaTek and the Taiwan Semiconductor Manufacturing Company's plant in southern Taiwan. Damage to this plant has impacted on the TSMC's ability to manufacturer the MediaTek MT6625 family of communication chips although the TSMC was hoping to restore full production by June. Whilst it is not clear if the TSMC's factories are working at full capacity, industry sources have cited that supply issues with these chips are set to end in the third quarter.

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The same industry source implies that there is still demand for the MediaTek MT6625 despite the shortage of the components. Better yet for MediaTek, this demand is seen to be increasing and this is good news from the chipset designer as it will be able to get more chips to the market. This may soften prices of the MT6625, although this will happen anyway as the design ages or matures. The impact on MediaTek should be good news with industry experts expecting the company to post 30% revenue growth in the second quarter of 2016 and a further double digit increase in the third quarter. This is good news for MediaTek as the company has been struggling in the face of stiff competition, having become a victim of its own success: as MediaTek System-on-Chips have become more sophisticated, so they have become more expensive and whilst the company's products are comparable to the likes of Qualcomm, NVIDIA and Samsung, arguably MediaTek does not have the same branding.