MediaTek's profitability has come under pressure due to falling ASPs of smartphone chips, and will face further pressure in 2016, according to industry observers.

Falling smartphone-IC prices particularly prices for 3G chips is negatively affecting MediaTek's profit performance, said the sources. MediaTek enjoys a market share of more than 50% in 3G smartphones, which, however, is no longer a driver of the company's profit growth, the sources noted.

MediaTek also faces intensifying competition from its fellow China-based peers, the sources indicated. China-based IC design firms such as Spreadtrum Communications are being financially backed by the China government which is making efforts to boost development of the local IC industry sectors.

MediaTek has disclosed its cumulative 2015 revenues through November slid 0.6% from a year earlier to NT$194.74 billion (US$5.94 billion). And based on the company's revenue estimates for the fourth quarter, MediaTek's revenues for all of 2015 will represent a 1-2% decrease.

MediaTek predicted its EPS will slip to NT$2.54-3.10 in the fourth quarter from NT$5.09 in the third. EPS for all of 2015 is likely to reach NT$16.31-16.87 far below the NT$30.04 reported for 2014.