MediaTek will start to recognize gains from the sale of its China-based subsidiary AutoChips in 2017, according to the Taiwan-based IC design house.

MediaTek indicated the sale of AutoChips will generate an additional pretax profit of nearly NT$12 billion (US$393.8 million), which will be recognized in three years. Of the amount, MediaTek will recognize NT$5 billion in its financial statement for the first quarter of 2017.

In addition, MediaTek revised upward its operating expense ratio for the current first quarter to 30-34%, while reiterating its revenue and gross margin outlook given in end-January. The company expects to post revenues of between NT$53.6 billion and 59.1 billion for the first quarter of 2017, down by up to 22% sequentially, with gross margin of 32.5-35.5.

The higher expenses could mean MediaTek will post lower-than-expected operating income for the first quarter of 2017. Nevertheless, rising non-operating profits as a result of recognized gains from the sale of AutoChips can help offset the impact on MediaTek's net income for the quarter.

MediaTek also announced its board of directors has approved the company's 2016 financial report. MediaTek reported net profits of NT$23.7 billion on revenues of NT$275.51 billion for the year, while gross margin slid to a record low of 35.64%. The company's EPS for 2016 came to NT$15.16, hitting the lowest in three years.