Just last week, Taiwanese semiconductor giant, MediaTek, reported that its net profit grew 19% during Q3 2016, thanks to strong demand from China and other emerging markets. However, in a word of caution to its investors, the company's vice chairman, Mr. Hsieh Ching-jiang, presented a bleak outlook for the current quarter, saying that "Revenue growth momentum will slow down in the fourth quarter, as demand is to diminish when the consumer electronics industry enters the slack season". The company apparently expects its revenues to decline by anything between 7 and 15 percent, which translates to a shortfall of between NT$66.6 billion ($2.11 billion) and NT$72.9 ($2.31 billion) billion this quarter, while the gross margin is expected to remain between 33.5% and 36.5%. Of course, there are other reasons apart from supply constraints that will apparently take a substantial toll on MediaTek's topline in Q4 2016.
According to Mr. Hsieh, the foundries still do not have enough production capacity for 28nm chips, which is something that's hitting MediaTek hard. The company says it expects its smartphone and tablet chip shipments to decline by around 10 million units this quarter compared to the preceding three-month period. While MediaTek had managed to ship about 145 to 155 million chips in the third quarter, Mr. Hsieh said that he expects the company to be able to ship 135 to 145 million units during the fourth. MediaTek's Q3 2016 revenues came in at NT$78.4 billion ($2.49 billion), which is a massive 37.6% growth over its revenues during the same period last year.
MediaTek is currently one of the largest semiconductor chip-makers on the planet alongside the likes of Intel, Qualcomm, Samsung, and NVIDIA. The company started off back in the 1990s as a small-time semiconductor company designing inexpensive chips for optical drives and home entertainment products, but eventually got into the lucrative world of smartphones and tablets; something that has now helped the company become one of the most well-known brands within the industry. While most of the devices based on MediaTek's mobile SoCs and baseband chips are not readily available in North America and Western Europe, they are pretty common in many other parts of the world, especially emerging economies in Asia such as China and India.