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Intel, MediaTek well galvanized to perform better in 2018
Source: DIGITIMES   Editor: Helan   Update Time :2018/2/2 17:23:39

Though not scoring good revenue and profit performances in most part of 2017, chipmakers Intel and MediaTek have both witnessed significantly improved gross margins in the fourth quarter due mainly to their efforts in trimming operating costs and adjusting business deployments, allowing to aim at better results in 2018, according to industry sources.

The shrinking global PC market and its lackluster performance in the mobile device sector prompted Intel to enforce a major business transformation program starting in 2016, focusing more on the sectors of datacenters, autonomous vehicles, IoT, AI, and 5G applications and laying off as many as 12,000 employees, or over 10% of its global workforce, the sources said.

The efforts started to bear fruit in the fourth quarter of 2017. Intel's revenues for the quarter rose 4% on year with EPS reaching US$1.08, all better than market expectations.

The fourth-quarter revenue ratio for non-PC businesses hit a historic high of 47%, with datacenter revenues surging 20% on year to US$5.6 billion, IoT revenues soaring 21% to US$879 million, and FPGA incomes shooting up 35%, which together could offset the decreases in revenues from the PC sector.

In addition, Intel's gross margins rose 1.4 pp on year to 63.1% in fourth-quarter 2017, due partly to sales growth of high-profit server platforms and partly to sharp cuts in personnel and marketing expenses.

Intel will raise its capital expenses to US$14 billion in 2018 from US$11.5 billion in 2017, seeking to inject more growth momentum into its operations, the sources said.

Sharp declines for MediaTek

In recent years, Taiwan's MediaTek also posted sharp declines in earnings, as it could hardly compete well with Qualcomm in the high-tier smartphone chip segment while facing fierce competitions in the midrange space. Also, delays in the launch of key chip solutions also led to sharp decreases in orders from customers.

MediaTek's EPS for the first three quarters of 2017 reached only NT$9.06 (US$0.309), compared with a high of NT$30 recorded in 2014. But the firm's gross margin rose 2.9pp on year to 37.4% in the fourth-quarter 2017 and annual EPS rebounded sharply to over NT$15, mainly bolstered by a favorable product mix and non-operating income of NT$9.45 billion from unloading stakes in its re-invested Shenzhen Goodix Technology.

MediaTek's sharp increase in EPS was also driven by its move to cut R&D expenses by 40% and remarkably trim personnel costs following the appointment of Rick Tsai, former CEO of Taiwan Semiconductor Manufacturing Company (TSMC), as the IC designer's co-CEO in June 2017.

With its corporate organization and operating strategies sharply revamped, MediaTek is seen better galvanized to challenge new business goals in 2018, as it has received orders from Apple for wireless chips and may also tap into the supply chain of medem chips for iPhone devices, according to industry sources.

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