A seasonal slowdown in end-market demand, as well as the continued strengthening of the US dollar impacting emerging market growth, will drag down MediaTek's revenues in the first quarter of 2017, according to company vice chairman Ching-jiang Hsieh.

MediaTek expects to post a revenue decline of 14-22% sequentially to between NT$53.6 billion (US$1.71 billion) and NT$59.1 billion in the first quarter of 2017, with gross margin of 32.5-35.5%.

Emerging markets will continue to drive worldwide sales of smartphones in 2017, when unit shipments are forecast to increase 4-6% on year to 1.6-1.7 billion units, said Hsieh.

China could face limited growth potential in 2017 as the market are saturated, but emerging markets will see growth of 14-16%, Hsieh noted.

MediaTek, specializing in SoCs for smartphones and tablets, will continue to improve its product mix with new and cost-optimized solutions ready for mass shipments in the second half of 2017, Hsieh indicated.

MediaTek's gross margin for the first two quarters of 2017 will be similar to that reported for the fourth quarter of 2016, but is expected to rise at a gradual pace during the second half of the year, Hsieh said. The company is striving to improve its gross margin for all of 2017, Hsieh added.

MediaTek saw its gross margin fall below 35% in the fourth quarter of 2016. The company's gross margin for all of the year reached a record low of 35.6% despite record revenues.

MediaTek reported gross margin for the fourth quarter of 2016 fell 4pp from a year ago and 0.7pp sequentially to 34.5%, while revenues decreased 12.4% on quarter but increased 11.3% on year to NT$68.68 billion. Net profits for fourth-quarter 2016 declined 34.4% sequentially to NT$5.14 billion with EPS coming to NT$3.23.

MediaTek posted record revenues of NT$275.5 billion for 2016, but the year saw a record-low gross margin at 35.6%. The company generated net profits of NT$24.03 billion in 2016, down 6.7% on year, with EPS reaching NT$15.16 compared with NT$16.60 in 2015.