MediaTek expects to post revenue growth of 24-32% sequentially in the second quarter of 2016. However, gross margin for the quarter is likely to fall further, according to the smartphone-chip provider.

MediaTek saw its first-quarter revenues fall 9.4% sequentially to NT$55.91 billion (US$1.73 billion), with gross margin reaching a record low of 38.1%.

MediaTek expects to report revenues of between NT$69.3 billion and NT$73.8 billion for the second quarter, while combined shipments of its smartphone and tablet chips will reach 135-140 million units, company president CJ Hsieh said at an April 29 investors meeting. Handset subsidies from telecom operators in China are key to boosting the company's revenues and shipments during the quarter, Hsieh indicated.

Despite higher shipments and revenues, MediaTek's gross margin will likely fall to 33.5-36.5% in the second quarter due to poor smartphone-chip prices as well as lower-margin models China's telecom carriers are mainly subsidizing, Hsieh said.

MediaTek also cut its gross margin outlook for all of 2016 to 35-38% but has maintained its revenue target at 10% growth, according to Hsieh.

Nevertheless, MediaTek expects to grow its Helio line of smartphone chips for mid-range and high-end smartphones as a proportion of the company's total shipments to more than 15% in the second quarter, Hsieh noted.

Hsieh also disclosed that volume production of MediaTek's 10nm chips will kick off around the end of first-quarter 2017. The company also plans to roll out its 7nm products in the second half of 2017 with volume production scheduled for 2018, Hsieh added.

Hsieh previously remarked that MediaTek would aim to grow its Helio line of smartphone chips as a proportion of company shipments to more than 20% in 2016 from only 8% in 2015.

In other news, MediaTek has decided to hand out a cash dividend per share of NT$11 for 2015, compared with the NT$22 distributed for 2014. The company's gross margin fell 5.52pp on year to 43.23% in 2015 while net profits declined 44% to NT$25.96 billion. EPS for 2015 came to NT$16.60.