Taiwan chipmaker MediaTek may find it a difficult job to score an estimated 10% annual growth in total mobile AP shipments for 2019, given the global smartphone market still facing headwinds in the coming year, according to industry sources.

As scheduled, MediaTek launched on October 24 its new-generation Helio 70 mobile AP with enhanced AI engine that can work seamlessly across both CPU and GPU to deliver much faster performance for AI applications. And ever since, the company has received strong patronage from China smarthone vendors including Xiaomi and Oppo, the sources said.

Nevertheless, MediaTek still set its mobile chipsets shipment goal for the fourth quarter of 2018 at 100-110 million units as recorded in the third quarter, due mainly to lackluster smartphone market demand in slowed handset sales growth.

Sluggish global demand and strong competitions from Qualcomm in winning larger shares of mid-range and high-end mobile chipset markets and from China chipmaker UNISOC (Spreadtrum & RDA) in vying for more orders from customers in newly emerging markets have imposed increasing pressure on MediaTek seeking a pickup in 2019 mobile AP shipments, the sources indicated.

In addition, an average 10-20% downward pressure on unit chipset prices in 2019 may prevent MediaTek from accomplishing its revenue growth goal for the year, the sources commented.

Cutting prices and orders

Though MediaTek has significantly upgraded the AI functions of its Helio 70 chipset solutions, Qualcomm has released the Snapdragon 7 series dedicated to serving mid-range and high-end smartphone vendors in China and other emerging markets. Accordingly, the sources continued, MediaTek may face the pressure of customers cutting both prices and orders, and chances will become increasingly slim for the company to further boost its market shares in 2019, given the fact that AI chips have become standard offering for smartphones.

Qualcomm is expected to dominate the supply of 5G modem chips throughout 2019, as MediaTek's is not expected to kick off 5G modem chip volume production at TSMC until the second quarter for shipments by the end of 2019 at the earliest. This will further squeeze the room for MediaTek's market share expansion in the coming year, industry sources said.

MediaTek's revenues for October 2018 decreased 9.8% on month and inched down 0.84% on year to NT$20.83 billion (US$674.94 million) and its combined revenues for the first 10 months of the year also edged down 0.4% from a year earlier to NT$198 billion. The company estimates its revenues for the fourth quarter 2018 to reach the NT$59-64.3 billion level, with a gross margin of 28.5%, according to company sources.