MediaTek expects its revenues to fall up to 15% sequentially in the fourth quarter of 2016 with gross margin raning from 33.5% to 36.5%.

Foundries' production capacity for smartphone chips particularly 28nm solutions has been tight, which affected MediaTek's shipments in the third quarter, said company president Ching-Jiang Hsieh.The supply constraints are likely to persist through the end of 2016, Hsieh indicated.

Meanwhile, customer demand for certain products is slowing down which will also affect negatively MediaTek's performance in the fourth quarter, according to Hsieh.

MediaTek's overall smartphone and tablet chip shipments will decrease to 135-145 million units in the fourth quarter from 145-155 million units in the third, Hsieh indicated. Of the shipments, 4G solutions will account for 70% compared with 75% in the prior quarter, while the Helio line will drop to account for 10% from 15%.

MediaTek expects to post revenues of between NT$66.6 billion (US$2.11 billion) and NT$72.9 billion in the fourth quarter, down 7-15% on quarter. Gross margin will be kept in the range of 33.5-36.5% in the fourth quarter and the next several quarters due to continued-intense competition in the smartphone-IC market, said Hsieh.

MediaTek posted revenues of NT$78.4 billion in the third quarter of 2016, up 8.1% sequentially and 37.6% on year, while gross margin stayed unchanged from the previous quarter but fell 7.5pp from a year earlier to 35.2%.

MediaTek generated net profits of NT$7.83 billion in the third quarter, up 18.8% on quarter but down 1.6% o year, with EPS coming to NT$4.98.

In addition, Hsieh disclosed MediaTek is scheduled to introduce its next-generation Helio smartphone chips - the X30 that will come with a Cat 10 modem - at the end of 2016 and enter volume production of the chips in the first half of 2017. The company will also launch entry-level and mid-range products that will support Cat 7 in 2017.