MediaTek is expected to see its first-quarter revenues hit the high-end target of its guidance of NT$52.5-57.4 billion, and post an up to 20% sequential rise in second-quarter revenues, according to market sources.

An earthquake that hit southern Taiwan on February 6 interrupted production at several TSMC fabs resulting in wafer delivery delays. MediaTek is reportedly among the companies which might have been affected by damaged wafers at the foundry due to the earthquake. Nevertheless, TSMC will manage to recover its lost production for MediaTek and help the fabless firm meet the high end of its sales guidance for the first quarter of 2016, the sources said.

Meanwhile, demand from China's handset market is picking up in the latter half of the first quarter, as local mobile operators have started to offer subsidies on smartphone purchases, the sources indicated. MediaTek will be benefiting from the rising demand, mainly coming from replacement purchases, the sources said.

Shipments for new smartphone models set to roll out in the second quarter will boost MediaTek's revenues during the quarter, the sources noted. MediaTek is expected to report a revenue increase of 10-20% sequentially in the second quarter, the sources said.

In addition, MediaTek is looking to expand its mobile SoC lineup targeted at the high-end smartphone market for 2016. The move is aimed at improving profitability at the company, the sources suggested. MediaTek recently launched its Helio P20 and X20 series SoCs. The company is also scheduled to roll out new chips built using more-advanced 10nm process technology in the second half of 2016, the sources said.

MediaTek said previously that intense competition in the handset-IC market will hurt the company's gross margin performance in 2016. MediaTek's gross margin fell below 40% in the fourth quarter of 2015.