TAIPEI — MediaTek, which has seen its share of the smartphone business plummet during the past two years, is turning to new products such as IoT chips to drive sales growth.
MediaTek is shifting to products boosting sales that in the third quarter brought in about a third of the company’s revenue. The company expects that chips for IoT, game consoles and ASICs will contribute about a third of MediaTek’s total revenue this year.
The company is selling IoT devices to new customers such as Amazon, Google and other Chinese internet companies that MediaTek declined to name. MediaTek said it also has made chips, including ASICs, that go into game consoles for Sony and Microsoft.
The company’s shift away from Chinese smartphone makers to the world’s internet giants comes as Apple said it may start buying modems from the Taiwanese company in the future, according to the Wall Street Journal. MediaTek sells smartphone chips to all of the major handset makers except Apple.
David Ku
MediaTek’s IoT strengths include existing designs for sensors, processors, communications and power consumption, Chief Financial Officer David Ku said on a conference call to discuss the company’s third-quarter 2017 financial results.
While the IoT business is growing, the pathway to the market that includes refrigerators, televisions and air conditioners remains unclear.
MediaTek’s growth segment is benefiting from fast-growing demand for shared bikes in China, voice assistants, game-console ASICs and set-top boxes.
The company is selling its tablet quad-core processor into the Amazon Echo, a product expected to ramp up to more than 25 million units, including about $7 to $8 of processor and connectivity silicon, according to Randy Abrams, an analyst with Credit Suisse in Taipei.
“We estimate the growth business will be up 30-35 percent year on year in 2017, contributing 25-30 percent of the company’s sales at greater than 40 percent gross margins, and the momentum should sustain into 2018-2019,” Abrams said in a Nov. 1 report.
Sales Plunge
MediaTek’s sales during the third quarter plunged more than 18 percent to NT$63.7 billion ($2.1 billion) compared with NT$78.4 billion in the same period a year ago.
MediaTek says it is facing strong price competition in the smartphone business, especially in China. The smartphone business during 2017 and last year has been “flattish," MediaTek said as more handset makers including Apple, Samsung and Huawei are using their own chip designs, especially for high-end phones.
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