Unfortunately, due to the coronavirus outbreak in China, demand from the Chinese market for chips is expected to decline. According to Digitimes, MediaTek’s chip demand appears to be affected as well, as the Chinese market is generally absorbing almost 60% of the company’s global chip sales. As a consequence, the chip manufacturer has decided to lower its global 5G handset sales projection for 2020. Initially, sales were estimated to amount to more than 200 million units, but this number has now been slightly adjusted down to 170-200 million units.
However, MediaTek appears to not be concerned in regards to this change. MediaTek’s CEO, Rick Tsai, is confident that the company’s new-generation 5G, AI and AIoT chips will be able to overcome the short-term impact of the coronavirus outbreak and compensate with profit in the middle and long term. The company’s CEO also stated that the new 5G, ASIC and automotive chip solutions’ sales will be responsible for 15% of its 2020 revenues, instead of the predicted earlier 10%.
Tsai also stated that MediaTek’s revenue for the first quarter of 2020 is estimated at around NT$55-62 billion, which amounts to around US$1.83-2.06 billion. But what exactly do those numbers mean? According to MediaTek’s financial report, revenue is down 7-15% from the previous quarter, but up 4-15%, compared to a year earlier.
The chipmaker’s CEO is confident because of the 2019 increase of revenue and profit, and will set in place an aggressive chip market growth strategy. Tsai has illustrated their competitiveness by referencing MediaTek’s newly-launched Dimensity series 5G SoC, based on which Chinese vendors are actively beginning to develop new devices. Other strong prospects for the company consist of its new-gen 5G, Wi-Fi 6, AI, ASIC and automotive chips.