IC design house MediaTek expects its second-quarter revenues to post an up to 8% sequential increase to between NT$56.1 billion (US$1.86 billion) and NT$60.6 billion. Gross margin for the quarter will be better than the prior quarter's level thanks to a more favorable product mix, according to the smartphone SoC vendor.

MediaTek is looking to ship a total of 110-120 million SoC chips for smartphones and tablets in the second quarter, company vice chairman Ching-jiang Hsieh said at an April 28 investors conference. Smartphone demand is picking up slowly, but should start to accelerate at the end of the second quarter when inventory in the smartphone industry supply chain drops, Hsieh indicated.

MediaTek's 10nm Helio X30 chips are already in mass production at Taiwan Semiconductor Manufacturing Company (TSMC), Hsieh noted. MediaTek's 10nm smartphone chips will still account for an insignificant portion of company revenues in 2017, when 16nm and 28nm products remain MediaTek's major smartphone-IC product lines, Hsieh said.

MediaTek will use TSMC's 12nm process technology to build a new SoC solution targeted at mid-range smartphones later in 2017, Hsieh disclosed. The company will also move forward rolling out its next-generation product using a more-advanced 7nm process node, Hsieh noted.

Hsieh forecast that smartphone demand worldwide will come to 1.6-1.7 billion units in 2017, which will represent a single-digit increase compared to 2016. For MediaTek, it could be a challenge to post smartphone-chip shipment growth in 2017, Hsieh admitted.

MediaTek reported consolidated revenues for the first quarter of 2017 declined 18.3% sequentially to NT$56.08 billion, while gross margin reached a record low of 33.5%. Net profits for the quarter, however, soared almost 30% on quarter to NT$6.64 billion thanks mainly to recognized gains from the sale of its China-based subsidiary AutoChips.

MediaTek is likely to post a 5-10% decrease in smartphone-chip shipments in 2017, according to industry sources.

MediaTek's smartphone-chip shipments for the first half of 2017 will reach just over 200 million units, which means the shipments will have to jump over 50% in the second half of the year in order to top the early 500 million units shipped in 2016, the sources said.